Insurance for TF advance payments

[davidc]

Does anyone know if it is possible to insure the sum advanced to a timber frame supplier for manufacture of the kit against the risk of them going bust etc.

 

Am I wrong to assume standard self -build insurance policies don't include this cover ?

[Bitpipe]

Look into section 75 credit card protection - I believe (but not 100% sure) that if you pay over £100 of the balance on a card then the card issuer is jointly liable for the whole contract.

 

You may struggle to persuade the supplier to take some payment on a card but I believe it just needs to be over £100. By (EU) law they are also not allowed to add a % surcharge anymore either.

 

I've only been shafted once on the build by the balustrade supplier going bust (and reviving later as a new company) but as the whole amount (£3500) was on a card, I got a settlement for the outstanding amount to complete the works.

[newhome]

7 minutes ago, Bitpipe said:

Look into section 75 credit card protection - I believe (but not 100% sure) that if you pay over £100 of the balance on a card then the card issuer is jointly liable for the whole contract.

Yes but only up to 30k and most timber frame arrangements will be over the limit. You can’t claim against stage payments either, it’s the full cost of the order that is important. 
 

I paid a deposit, then stage payments in advance of each delivery. I was still putting that money at risk clearly but check out the trading history of said company, their turnover, director history etc. The company I dealt with are still trading 10 years on. 
 

You could look at an Escrow agreement potentially but that might be difficult / not cost effective. 

[Bitpipe]

1 minute ago, newhome said:

Yes but only up to 30k and most timber frame arrangements will be over the limit. You can’t claim against stage payments either, it’s the full cost of the order that is important. 
 

I paid a deposit, then stage payments in advance of each delivery. I was still putting that money at risk clearly but check out the trading history of said company, their turnover, director history etc. The company I dealt with are still trading 10 years on. 
 

You could look at an Escrow agreement potentially but that might be difficult / not cost effective. 

 

Thanks for the clarification - I did suspect it wasn't that easy. However for other items under the £30k limit (kitchens etc) then cards are definitely a useful part of the mix.

[Thedreamer]

If I was committing a bit of money, I would be doing a companies house search.

 

https://beta.companieshouse.gov.uk/

 

 

[PeterW]

2 hours ago, davidc said:

Does anyone know if it is possible to insure the sum advanced to a timber frame supplier for manufacture of the kit against the risk of them going bust etc.

 

Am I wrong to assume standard self -build insurance policies don't include this cover ?

As others mentioned, escrow may be your only option. A solicitor could do this for you but you would also need to understand the contract terms as you may find (quite rightly) the TF manufacturer is using your money for paying for your raw materials. You could end up staging the payments on proof. 

[nod]

Be very careful in your choices 

A lot of building companies will go bust this year 

 

[recoveringbuilder]

I also would be very careful, my kit was ordered without a deposit, I didn’t pay them anything until 10 days before delivery was due of the first part by which time they had been liaising with my architect and engineer, coupled with the fact that you previously weren’t happy about not having a contract I would tread with care.

[davidc]

They have been operating in their current form supplying and erecting timber buildings since 1946 though this doesn't make them immune from any potential economic downturn. They want 29% on order and another 25% 28 days before the main kit is delivered, with confirmation in writing that title to goods is held by me following each payment.

Edited June 23, 2020 by davidc

[PeterW]

1 minute ago, davidc said:

They have been operating in their current form supplying and erecting timber buildings since 1946 though this doesn't make them immune from any potential economic downturn. They want 29% on order and another 25% 28 days before the main kit is delivered, with confirmation in writing that title to goods is held by me following each payment.

 

That is quite a tidy arrangement.

 

Is the remaining 46% due on erection or at some other time..? And is there any retention.?

[davidc]

@PeterW But tidy for whom ?!

 

Remainder of terms are another 25% within seven days of invoicing after principal kit delivery, 15% payment on making wind and watertight and balance within thirty days of completion. The contract isn't only for wind and water tight structure but also includes the roofing, cladding and internal joinery. No retention in their quote come contract.

[Temp]

Companies can take out advance payment insurance (aka Credit Insurance, Supplier default insurance) but I don't know if individuals can. My understanding is the insurance co has to investigate the company in order to work out how much premium to charge and that research costs. There are likely to be minimum premium values.

 

Google finds brokers. I guess you can ask them.

 

https://www.credit-insure.co.uk/credit-insurance/types-of-credit-insurance-policy/advanced-payment-protection/

 

https://www.eulerhermes.co.uk/trade-credit-insurance/solutions/advanced-payment-protection.html

 

 

 

[PeterW]

1 hour ago, davidc said:

@PeterW But tidy for whom ?!

 

Remainder of terms are another 25% within seven days of invoicing after principal kit delivery, 15% payment on making wind and watertight and balance within thirty days of completion. The contract isn't only for wind and water tight structure but also includes the roofing, cladding and internal joinery. No retention in their quote come contract.

 

Tidy for you in that the title of goods transfers to you through the process. That is key and that could also mitigate a lot of your loss if the company went bang. To me, they have a 6% retainer in there - that is the balance on completion - however I would ask how the internal joinery is priced into the contract (supply/supply & fit) and what it includes. The remaining elements such as cladding and roofing are part of the core build so I assume this is due only when the building is wind and watertight.

 

Who is responsible for the windows out of interest..?

[davidc]

@Temp Thanks for those, I have contacted some brokers, so far to no avail, but the two more you have listed there might differ in response - though no doubt the uncertainty of risk factor for them might make it fairly costly even if, as you say, they will deal in c2b rather than b2b.

 

@PeterW Sorry - yes windows, veluxes and rainwater goods also included.The internal joinery includes both supply and fit and comprises stairs, first floor, partitions, sound insulation, all plaster boarding, internal doors and frames skirtings, architraves, windowsills etc. They are also prepared to work around the electrician, plumber and MVHR installer that I appoint. External perimeter decking and screening also included.

 

The odd thing is I suggested some sort of title of goods arrangement last week and at first this was met with the claim that it was hard to do as under Scots law as property could only be heritable rather than "moveable". But after I hesitated this week due the risk factor this objection seems to have been put aside.

Edited June 23, 2020 by davidc

[PeterW]

So thats pretty much a turnkey build - who is doing the thermal insulation or is it SIPs..?

[davidc]

It is JJI joist (350mm wall, 450m roof) construction with blown woodfibre insulation - that too is included in quote.

Edited June 23, 2020 by davidc

[SuperJohnG]

Following this topic with interest. I'm due to place an order for a kit in region of 80-100k in a few months but this part is bothering me already. I can't believe that there is nothing put there already to cover this.

 

It's worth nothing for all that a companies house check will show you the P&L for any accounts that have been posted  but it will tell you nothing of their current cash position so tread carefully. 

 

A good history of trading profitably will help reassure but it by no means precludes any company from going under. 

[Thedreamer]

12 hours ago, SuperJohnG said:

Following this topic with interest. I'm due to place an order for a kit in region of 80-100k in a few months but this part is bothering me already. I can't believe that there is nothing put there already to cover this.

 

It's worth nothing for all that a companies house check will show you the P&L for any accounts that have been posted  but it will tell you nothing of their current cash position so tread carefully. 

 

A good history of trading profitably will help reassure but it by no means precludes any company from going under. 

 

I usually review the financial statements with caution as the figures are going to be historic.

 

I'm more interested in other filed documents at Companies House such as: has a recent security been granted, overdue accounts, changes in ownership/management and winding up notices. 

[SuperJohnG]

To follow up with this I have ordered my kit and they will issue vesting certificates throughout and put my name on material thats theoretically mine so if they went downhill I'd be able to get it. 

[Gus Potter]

Does make you wonder if stick building is a safe way, good for the local economy at the moment..

 

You buy the material as you go, support your local joiner etc to build the kit and so on?

 

After all, if you go for a mid range kit supplier then they too may not have the clout to get the insulation etc on time, where as your local guy can pick up a few sheets just to keep you on track.