JCT 21.2.1 Insurance
JCT 21.2.1/6.5.1 Non-Negligent Liability Insurance
JCT 21.2.1/6.5.1
JCT Clause 21.2.1 or non-negligent liability insurance as it is sometimes referred to is taken out jointly between the employer and the contractor. It provides protection for any loss or damage to adjacent or surrounding properties, for example against damage such as collapse, vibration, landslip and similar.
Who might need JCT 21.2.1 Insurance?
With land to build property on at a premium particularly in expensive or congested inner city areas there is usually only one way to build and that’s up or down. As a contractor a JCT contract might be common place, it lays down a clear set of obligations for all parties to work to and details who is responsible for what.
A building contractor may be required to affect a JCT 21.2.1 insurance policy to cover the clients property on which they are working, this would normally be done in joint names.
A contractor with his employer or his customer may find that the contract requires 21.2.1 insurance to cover any damage to surrounding properties which can occur when digging below ground, whether that’s to add new foundations, provide underground rooms or just because a new building is being erected to replace an old demolished one.
Will Public Liability insurance provide the same cover as JCT 21.2.1/6.5.1?
Both JCT 21.2.1 insurance and Public Liability Insurance are in effect the opposite of each other. JCT 21.2.1 provides Non-Negligent cover where with Public Liability Insurance the policyholder has to be found negligent, therefore they are actually two separate covers.
A public liability policy will provide cover (indemnity) where there has been loss damage or injury to a third party which is the action of the policy holder, so there has to be negligence involved to be covered.
However, JCT Clause 21.2.1/6.5.1 Insurance is bought in addition to Public Liability and Contract Works cover; It is there to protect you and the property owner if something happens that results in financial loss to a third party, but where negligence by you as the contractor cannot be proven
Who is protected?
Usually a JCT Clause 21.2.1/6.5.1 contract will require the policy to be in joint names as we have already established, this will be between you the contractor doing the work and the client – the property owner, for example. As the contractor, you will be responsible for arranging the JCT Insurance policy, paying the premium and complying with the policy conditions.
What is covered under JCT 21.2.1/6.5.1 Insurance?
Where non-negligence is proven, JCT 21.2.1/6.5.1 usually protects the property owner against loss or damage sustained to nearby property whilst carrying out a contract.
Typically a JCT 21.2.1 insurance would cover;
Subsidence
Collapse
Lowering of ground water
Heave
Landslip
Vibration
Weakening or Removal of Support
Will my client’s buildings insurance not cover any damage?
A standard home insurance policy doesn’t cover any work which is carried out to your property by a contractor. It’s really just a cover for things like fire, theft or other unexpected events which come out of the blue. It won’t cover any damage to neighbouring property either, and if they decided to sue you the costs could run into thousands. It’s really not a risk worth taking.
What other insurances might be required alongside non-negligence liability insurance?
A JCT contract can be built up of many different clauses, the ones that typically concern insurance is usually JCT 21.2.1 and JCT 22 a,b,c. JCT 22 will define who is responsible for such items as the Contract Works or existing structure Insurance.
Insurance for these is easily obtained and again whilst protecting the contractor it’s also protecting the employer as well.
A contract works insurance would as the name suggests protects the contractor for the works that he is doing.
Sometimes there is the requirement for the contractor to hire in certain types of plant such as excavators, small cranes, dumpers and perhaps cherry pickers to name a few. The can be easily covered on a policy that is specifically designed for this purpose call a hired in plant policy and also any plant that is owned by the contractor themselves.
Examples of 21.2.1/6.51. Claims
Buying non-negligent liability insurance or 21.2.1/6.5.1 in some instances is a last minute decision, with contractors or their employers being told that cover must be in place but they don’t really understand what it covers, here are a couple of claims examples:
Example one – A contractor was undertaking a demolition and refurbishment contract at three 18th century properties. 2 of the buildings were to be demolished and later rebuilt, the third property was to be refurbished which included underpinning.
A JCT 21.2.1 insurance policy was taken out in the joint names of the Contractors as well as the Employer. Whilst the property was being refurbished, plaster was removed from the walls exposing the brickwork beneath, sometime after this brickwork actually fell out of the chimney.
After two weeks cracks had developed, damage was to such an extent that a dangerous structure notice was served, this meant that there was a requirement to completely demolish the property.
An expert engineer was sought to advise on the property damage, the opinion was that the collapse was inevitable.
Its quite reasonable that this event could not have been foreseen and indemnity was provided under the insurance policy. The total claim was near on £1million which included expenses, demolition and the building works.
Example two – A conversion was being carried out by a contractor of a 100 year shop and flats into a surgery. The existing roof needed to be removed from both buildings, demolition of floors and internal walls along with the building of a new wall, there was also the involvement of some underpinning.
Cracking started to appear in the bathroom of a neighbouring property that shared a party wall, an engineer inspected the damage and concluded that the underpinning work had caused vibration and was duly responsible for the damage.
Generally, re-adjustment of foundations following underpinning does not result in significant cracking to buildings. The conclusion though was that damage had occurred because of the underpinning and vibration by the works. The claim was settled for £275,000
Why speak to Real Insurance about your JCT 21.2.1/6.5.1 Insurance?
Real Insurance Group Ltd are construction insurance specialists, we can obtain fast and competitive cover for JCT 21.2.1/6.5.1 Insurance as well as other contractors covers.
Speak to our commercial team today about your JCT insurance requirements, we need just a small amount of information about the contract and we can obtain a fast and competitive quote for your business.
