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 structures.
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 covered on a policy that is specifically designed for the hired in plant 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