Self build insurance vs JCT Joint name insurance

[aims]

Hi All,

 

I am currently in the tender process (main contractor) and am planning to use the JCT Minor Works contract (Architect as contract administrator). One thing I am trying to get my head around if the type of joint name insurances needed vs the usual selfbuild insurance that are more common (i.e. buildstore, protek, etc).

 

"Normal" Selfbuild insurances (from Buildstore, etc) contains the following in your own name:

1. Employer Liability
2. Public Liability
3. Legal expenses

 

However the JCT contracts request insurances to be in joint name between the client and contract i.e.

1. Contractor All Risk - this is the main one mentioned
2. Non negligence - (optional) if you are doing piling, etc near a party wall of a neighbouring property. If something goes wrong but there was no negligence it will fall on to me to still rectify the neighbours property
3. Public Liability
4. Employer Liability
5. Legal expenses

 

Would be nice to hear about how people handled their insurances if they used a JCT contract with their contractor. I am trying to figure out whether its pointless getting the self build insurance in my own name if the JCT requests some of them to be in joint name anyway. I may be in a scenario where I do get a seperate flooring company/security company in to do certain work rather than the main contractor so maybe I would need my own policy. Just feels odd about potentially paying twice for some of the same cover.

 

Cheers

[nod]

You can overpay on cover 

Especially if you start covering plant an individual trades 

Everyone on site should either have there own public liability or the company they work for should cover them 

 

If you are using a main contractor 

Your the client and not employing the trades 

A public liability that will cover someone wandering onto the site and injuring themselves and cover for fire and criminal damage 

 

[SimonD]

This is such a confusing topic. I did a course that covered this kind of stuff and I left with reams of paper and my head spinning!

 

It's often assumed that insurance is employer, public and legal expenses, but you also have to ensure that there is insurance in place should an accident happen that destroys or damages the partially built building being constructed (until you have building control completion) and to cover things like material or tool theft. A contractors all risks insurance should cover rebuild costs if something happens before the new building is completed - or you need to explicitly understand and agree this with any contractor you employ - and theft,for example. I don't think this needs to be in joint names as you pay this premium when employing a main contractor, unless you agree otherwise with the contactor. Likewise, if the main contractor is managing the site and all works, including employing all trades, then the main contractor should be taking out and paying for the employer and public insurances as part of its normal business. This is partly why the main contractor route can be expensive, you're handing it all over to them!

 

If I was doing any piling work using a contactor for this, I would also be looking for them to show they've got cover for non-negligence as rectification should fall to them, not you as they're providing the service, which you're paying for. The last thing you want is to try and prove negligence in order to make a claim to cover rectification.

 

Now, if you start employing trades to come on site, the situation becomes more complicated. You then need at least employer. and public liability cover, and possibly even all risks insurance because you are becoming the employer and partial contractor and if then something happens to the building that requires remedial or rebuild, who, you or your contractor becomes liable? In this case I do wonder whether you might need tocover yourself for all risks, but I don't know. It probably depends on the extent of work you are employig trades to do and at what point of the build.

 

With respect to JCT, I think there are several options with respect to insurance. For new build, either the contractor or employer take out insurance. In respect of renovation or extension the situation is slightly different because, I think, this comes down to an explicit agreement between contractor and client. But this may have been updated more recently than I looked at the JCT stuff.

 

I'm not an expert on this and because it isn't entirely straightforward, I'd seriously recommend you get some specialist advice on this.

[aims]

Definitely has my scratching my head for sure! I found this from the JCT website (for the minor works contract but I believe others are similar), which I think is designed to handle the scenario above you mentioned

"If the project is for new works only and there are no existing structures, clause 5.4A is applicable and clauses 5.4B and 5.4C should be deleted in the Contract Particulars. Clause 5.4A provides that the Contractor shall effect and maintain a Joint Names Policy for All Risks Insurance for the Works. All Risks Insurance is defined in the contract and insurance cover must as a minimum cover those defined risks."

"A Joint Names Policy (defined in the contract) is a policy of insurance that includes both the Employer and Contractor as a composite insured, which means that the insurers have no right of recourse against any person named or recognised as insured."

"The cover required may be provided either by way of a specific policy or through the Contractor’s annual all risks policy (CAR policy) provided the CAR policy is extended to recognise the Employer as a composite insured in respect of the Works"

So above mentions "All Risk" + Non-negligence cover is also mentioned in other JCT contracts (sections 21.2.1 / 6.5.1 in Intermediate 2016 but not mentioned in Minor Works 2016) as being in joint name too. My current stance is as follows (but you are right I should probably get some expert advice on this):

 

My own insurance in my own name (this will cover me if say items I bought get stolen, rather than the main contractor's tools, materials, etc):

1. Employer Liability
2. Public Liability
3. Legal expenses

Main contractor's insurance in their own name (same reasons as above but vice versa):

1. Employer Liability
2. Public Liability
3. Legal expenses

Insurance in joint name i.e. both myself (Employer) and Contractor:

1. Contractor All Risk
2. Non negligence (if needed)

 

[PeterW]

Any reason for wanting to use the JCT minor works contract for this ..? Is this a new build ..?

 

On 16/01/2021 at 12:54, aims said:

. I may be in a scenario where I do get a seperate flooring company/security company in to do certain work rather than the main contractor so maybe I would need my own policy. Just feels odd about potentially paying twice for some of the same cover.

So minor works won’t cover here - and it is pretty clear on that :

 

The Minor Works Building Contract is not suitable where the project is complex enough to require bills of quantities, detailed control procedures, or provisions to govern work carried out by named specialists.

 

I would be contracting with the main contractor on an agreed terms with payment schedules and should refer to the agreed design set provided by the architect. There shouldn’t be a need for a lot of the additional elements of the JCT contracts and it will cause complexity as you’ve found out. As @nod says, you could end up paying twice or more for cover. 

[aims]

Correct will be a new build. From previous discussions there's a few contracts that were mention i.e. RIBA, JCT MW, etc. It seemed JCT MW was most suitable for my project potentially even JCT intermediate.

 

Seems odd to have no allowance for a specialist sub contractor that has no connection to the Main Contractor to help on a project. I would assume the JCT MW is just clarifying that the MC can have no accountability (i.e. will not "govern") of the specialists work. Which makes sense to me i.e. I wouldn't expect my main contractor to have to be involved when I want a specific certain alarm system/flooring/fitted wardrobes, etc.

 

Would be interesting to know what types of contracts people did use in these situations (i.e. Main contractor for most of the work + some specialists like a cctv/alarm company). 

[SimonD]

Before I decided to take on our build myself, I spoke to contractors and looked at the insurance side of it all because several builders simply stated that they were fully insured and this turned out to be employer and public liability insurance, not all risks. I was also considering a JCT contract. Now, when I looked at the insurance side of this type of contract it became clear that the insurance specificied by the contract may in fact be quite limited in its scope and therefore opens up multiple risks that may not be apparent at the outset. I believe that a lot of people are falsely believing they're fully covered because the terms and their meanings are quite confusing.

 

I think you need to go through the prospective cover in each instance to understand what is covered and what is not and then seek to make up any shortfall, or not if you don't think the risk is sufficient to do so. One item not listed so far is both owned and hired-in plant and insurance - many hire companies will not hire you plant unless you can first show relevant cover ( short term/ad hoc this cover can be very expensive - some hire companies may simply add 12% or so to the hire costs) and may not be included in an all risks policy. On mine it is an optional extra.

 

All in all it's a minefield that unfortunately does require a good few hours of reading very boring policy documents and understanding the various risks you're exposed to during your building project. What has your architect as project administrator shared in terms of experience and input re this?

Edited January 20, 2021 by SimonD

[aims]

I feel I may need to push the architect a little more on this topic. He does generally agree with what I mentioned. He says JCT MW would be the go to contract and that he will specify all the insurances (i.e. Public, Employer, All Risk and Non Negligence) the contractor will need to have. I will still take out self build insurance to cover any equipment, etc I will have on site that do not belong to the MC. 

[aims]

Hi All,

 

Thought I would update this existing thread. I am due to start the build of project soon. Signed a JCT MW contract with the Main Contractor and my architect as the Contract Administrator. A question for anyone who has used JCT MW (or any I guess), have any of your builders found it difficult to get a joint name insurance (all risk, non-negligence, etc) which is mentioned in the contract?

 

I ask because my builder is trying to add me to his insurance but his brokers seem to suggesting that his current insurances may already cover everything (as joint name its not very common to do) and as the project is "referenced" in insurance docs this should also cover me. I'm a little apprehensive as this is not exactly inline with the JCT.

 

I have separately spoken to brokers myself (who do know about JCT Joint name) and forwarded them onto the builder but just wondered if anyone else experience something similar. I just find it odd brokers are having a hard time handling "joint name" insurances when JCT is supposed to be one of the more common/popular builders contracts.

 

Cheers

[Afzal]

Evening all 

 

so I have planning permission to build a single story residential house on my land. However I have a disused railway tunnel underneath my land which is owned by highway England. The tunnel has been build on 1899 and is disused in 1956. Currently there are other house build above the tunnel with the nearest only 4 meters from mine. We have carried out ground investigation which shows approximately 6 meter of natural rock. Highway England want us to get some type of insurance during the construction phase to cover any collapse of tunnel.

does anyone know more about this type of insurance cover and where I could get it. ???

 

help 

[Temp]

I think most self build insurance policies cover accidental damage to neighbouring property. I guess they are thinking about damage to houses and basements not tunnels but perhaps the wording would cover tunnels as well?

[SimonD]

I'd suggest finding a specialist broker, I'm not sure your standard self-build underwriter would know what to do with this one as a collapse of tunnel could be rather expensive to fix.

[AliG]

I am having exactly the same issue.

 

The architect has used the MW contract which specifies joint insurance or other.

 

People I have spoken don't do joint insurance.

 

The issue is that we ordered the frame direct from MBC so it is not part of the contract.

 

My argument is that the contract is covered by the contractor's insurance, but if we want to take out self build insurance that would cover the frame as well as everything else already covered by the contractor that should not be a problem.

 

Then I get put back to me what if the insurance companies argue about who is liable.

 

The contractor's broker says their minimum charge for a new policy would be £2500, I can get self build insurance for £700 so it seems like a waste of money.

 

 

[aims]

In the end for me in order to get a self build mortgage, I needed the self build insurance but then I also had the All Risk in joint name taken out with me and builder in order to complete JCT contract. The joint name All risk wasn't 2.5k, closer to around 1k but I imagine its project specific. There are some overlaps between the two policies but they are also different in that anything you purchase yourself is covered by your self build insurance.

 

I had non-negligence taken out too in addition to above in joint name due to my specific proximity to my neighbour's property (again this is project specific)