If you are involved in additions, alterations or renovations to existing buildings it can be a minefield when it comes to insurance. The insurance market is inconsistent with the approach to insurance of homes where work is being carried out, and this can often cause confusion and frustration to Registered Master Builders’ clients.
But first, it is the contract which sets out who is responsible for what, and the generally accepted practice is that the owner is responsible for insuring the works and the existing property.
That is fine provided a couple of things are done:
• The Registered Master Builder gets proof of insurance cover (owners don’t always do what they are supposed to).
• That the owner’s insurance is extended to name the Registered Master Builder as a joint insured (otherwise you may well get the owner’s insurer chasing the builder for recovery of any claims — and the builder’s liability policy may not cover this).
What often frustrates owners is that when they request insurance cover for works on an existing property from their house insurer they find out that it is not as straightforward as they first thought.
A number of domestic insurers do not provide contract works cover at all, or only through another insurer, and they most definitely do not like adding Registered Master Builders’ names to their client’s existing house policies.
The majority of house insurance policies contain exclusions relating to structural additions or alterations to the house unless the insurer has been notified and agreed in writing — so it pays to check. We are finding a number of owners coming back to the Registered Master Builder and asking them to insure the contract works, but this is not an easy option either.
If the Registered Master Builder insures the contract works and the owner insures the existing property, major complications can arise in the event of a claim, particularly where there are different insurers involved — each with their own interests — and the loss is not confined to the works.
It also means a variation in the contract which needs to be carefully managed.
• Why insure the contract works? Primarily to make sure there is money available to reinstate the works if loss or damage occurs. Otherwise you have to rely on the owner or the bank — not the best of options.
• Why insure the existing house/building? Again, to ensure there is money to reinstate the property if damage occurs.
There is little point in having the funds available for reinstating the works if there is nothing there for the existing property
There are plenty of horror stories about incidents that have occurred where it has been found that the insurance is not in place, or not adequate, or doesn’t cover the Registered Master Builder — so make sure you check! Make sure before you start work that:
• you have a signed contract,
• the contract is specific about who is responsible for what,
• the correct insurance policies are arranged,
• the policy cover is checked by someone who understands contracts/insurance,
• your own liability policy is good enough to cover any gaps and provide protection as a backstop, and
• all the policies remain current for the period of the contract and that premiums are paid (and don’t be afraid to ask your client for proof). It pays to be careful because we all know what can happen if a major loss occurs — everyone starts looking at the small print in the insurance policies and contract documents, and lawyers start rubbing their hands.
So get good advice, use a checklist and, if in doubt, talk to the experts in insurance for Registered Master Builders at MasterSure.
• Contact Alison on 0800 600 800 or e-mail firstname.lastname@example.org.