5 Reasons Why You Should Take Out Contract Works Insurance Yourself Rather Than Rely on Your Builder’s Policy
Tommy Hodgson is the Director of Eggar Forrester Insurance. In this article, he outlines the reasons why developers should arrange for a contract works insurance themselves instead of their builder.
A contract works insurance policy is most simply defined as an insurance policy covering the works in progress on a construction site. The contract between developer and builder will dictate who is responsible for arranging this cover, but here are some compelling reasons why we would recommend that you as the developer should strongly consider arranging the cover yourself:
If your builder arranges the insurance and goes bust partway through a job or walks away from a project, your project will be uninsured. Placing new insurance on a job in progress can be difficult and expensive.
If you leave your builder to insure the contract works, they may fail to insure correctly (meaning future claims are only part paid or not paid at all), fail to pay the premium (invalidating the insurance) or fail to insure at all. This will leave legal action as your only option and, even if successful, will leave you with an unfinished project for some time while you recover funds.
Taking out the policy yourself puts you in control. You can make sure the cover is appropriate, limits are accurate, and the insurer is reputable with a strong financial rating.
If you take out insurance yourself, there is often the option of insuring any existing structure and contract works together under a single policy. This can be financially beneficial and, by having one insurer involved rather than two, will simplify the claims process in the event damage is caused to both the existing structure and the works.
If a builder places the contract works cover, the JCT contract (or other developer/builder contract) will state that the policy should be in joint names (builder and developer). We know from experience that quite often this doesn’t actually happen, leaving developers exposed without the right to claim under the policy.
At Eggar Forrester Insurance, we regularly advise on and arrange contract works insurance policies, so please get in touch if you’d like to discuss any of the above or would like to receive a quotation.