At a glance
  • A step by step guide to ensuring your proposed works are covered
21st August 2017

Are you kick starting a complex home improvement project?

If you are considering any type of renovation, alteration, demolition or extension to your home, it is important to realise that this could have an effect on the cover provided by your household insurance policy. 

During contract works, your property is at a greater risk from factors outside of your control, and so you will need to protect it with the appropriate insurances. 

With Lark, you will get guidance that goes beyond the insurance of the existing structure. We will provide assistance with the insurance of the proposed works, the type of contract being signed and the adequacy of your contractors’ insurances. We can also meet with you and your project manager/architect to discuss your specific situation.

With a Lark Contract Works insurance policy, you will have complete peace of mind, knowing that you have done everything possible to ensure that you have sourced the best possible cover.

STEP BY STEP GUIDE

Your Role

Before Works Begin

  • Notify your account handler of any proposed works at the earliest stage, anything from general decoration to complete refurbishments.

  • Once you have obtained planning permission, if appropriate, and appointed a contractor, obtain a copy of their Contractors All Risk (C.A.R) if applicable, Public and Employers Liability insurance documents. You should make sure that your Contractor carries out the same checks for any sub-contractor that they use.

  • Complete the works questionnaire and send this together with the above and a copy of the proposed contract detailing the operative terms and a detailed schedule of works.

For larger projects, many clients either ask the architect or employ a project manager to oversee the work and ensure that it is carried out in accordance with your instructions and architects drawings.

When appointing a contractor it would be prudent to consider the following:

  • How long has the contractor been trading?

  • What previous experience do they have in managing projects of your size and nature?

  • Size of the company including no. of employees (full or part-time) and projects ongoing including the split between domestic and commercial work.

During Works

  • Inform us if the contract value has increased, the duration of the works has increased, or the nature of the works has changed.

  • Contact us if the project has substantially ceased for more than 30 days but prior to the end of the contract.

  • Advise us of any incidents that may give rise to a claim.

  • Advise us if there is any possibility that the works may cease for any reason, for any period of time exceeding 30 days.

End of Works

  • You must advise us when the works are due to complete. If ‘practical completion’ is signed, all cover under a Contractors ‘All Risks’ policy ceases immediately which could leave you underinsured in the event of a loss.

  • Provide us with a ‘completed’ or post-works rebuilding cost sum insured for the building. Some insurers may offer this facility free of charge by surveying the property once the work has completed.

Our Role

Before Works Begin

  • Review the information provided and source cover to meet with any contractual obligations, or where no contract is signed, provide you with the best protection that suits your requirements.

  • Liaise with you to understand what the completed property will look like and advise on any security and fire protections that may need to be incorporated as part of works project.

During Works

  • Arrange an on-site visit with you and your project manager/architect and at various stages during the works, if required.

  • Maintain regular contact with you and your project manager/architect throughout the duration of the works.

  • Deal with any claim notification and liaise with your insurers.

  • Towards the end of the project, discuss with you new arrangements for household insurance cover for the ‘completed’ buildings and any contents, fine art and jewellery cover required.

MAIN INSURANCE OPTIONS

Each project will be different, however, these are the main options available to you for arranging insurance during the course of the works.

Contractor insures the ‘works’ and you (the Employer) insures the buildings (existing structure).

If the contractor insures the works, there is potential for complications in the event of a claim. In the event both the existing structure and the works are affected, both insurers will look to appoint their own loss adjusters and there is potential for each insurer to quibble over which policy, parts of the damage fall under. In addition, the insurers for the existing structure will undoubtedly exclude all losses arising out of the activities of the contractors and restrict your insurance to very limited cover.

You insure the ‘works’ and the buildings (existing structure) under one specialist policy.

By transferring the existing structure cover onto a works policy, and insuring it in conjunction with the works, you are able to meet your requirements under a JCT Contract, receive wider cover and one insurer in the event of a claim.

Separate cover for Non-negligence (21.2.1) where there are Third Party Wall considerations such as an adjoining property or one in close proximity which could be affected by the works.

Some examples of this could be collapse, subsidence, heave, vibration, weakening or removal of support or lowering of groundwater. Irrespective of fault, the law dictates that you may be liable in Nuisance as a homeowner if a neighbouring property experiences any of the above.

Your architect or project manager will advise if this type of cover is appropriate and what level of indemnity is required by your contractor, this limit should represent the estimated maximum exposure including neighbouring property.

The request for the contractor to insure the non-negligence liability is the best option because the contractor can usually extend his third party liability coverage to cover non-negligence. In practice, it means that if there is damage (e.g. vibration) to an adjoining property than the contractors’ third party liability insurance will meet the claim one way or other. The risk of insuring non-negligence cover with a different insurer is that the two insurers could well argue as to whether or not there has been negligence and thus which insurer should respond.

KEY FEATURES OF AN IDEAL WORKS PROGRAMME

  • An appropriate JCT contract in joint names

  • A project manager to oversee the works programme from start to ‘Practical Completion’.

  • A single main contractor with adequate Contractors All Risks, Employers and Public Liability insurances

  • A clear schedule of the works

  • A schedule of condition of adjoining property

With all there is to consider, it is important to speak to your account handler in the event you are considering works, however small you consider the works to be.