Having building work done? Check your insurance

If you’re having building works done by a contractor you really should check your buildings insurance cover.  Most policies contain a clause like this one:

“CONTRACTORS EXCLUSION CLAUSE – This insurance excludes loss, damage or liability arising out of the activities of contractors”

So, that means that if you’re building an extension and your contractor damages next door’s house or property, you cannot claim from your insurance and would need to make a claim against the contractor.

That‘s straightforward enough, but what if the contractor goes bust? Or what if your neighbour makes a claim against you?  Yep, you could be liable with no insurance cover.

Let’s take a case where the work is covered by a Party Wall Award drawn up under the Party Wall etc Act 1996. That places a direct liability between the building owner (doing the work) and the adjoining owner for any damage arising. So, you build an extension, there’s a party wall award in place and there’s damage next door. The liability rests directly with you and unless any insurance provision has been made, you will NOT be covered. Never mind whether you think it was the contractor’s fault so he can pay. Well, can he? In the worst case, you will have to sue him or, once again if he goes bust you will be left holding the baby, so to speak.

All is not lost though. You can arrange particular cover for this risk and for negligent and non-negligent actions by a contractor. In all cases, you should check your policy AND speak to your insurance broker BEFORE you start works.

(Originally published by Steven Way, 3 July 2009)