If you’re having building work done by a contractor you really should check your buildings insurance cover. Very many 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? Well, 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.
For example, you build an extension, there’s a party wall award in place and there’s some damage next door. The party wall surveyors agree its caused by your work and that a financial recompense is appropriate.
The liability for that rests directly with you. It may be that you have some specialist insurance cover but in most cases your insurers will cover damage caused by your building contractor. Of course you may think that the contractor should pay for the damage but that will be a matter between you and your contractor and possibly their own insurers.
The bottom line is that when there is damage arising from your building work it is you who has the liability and you who will have to take action against the builder. Even then if he goes bust or ceases trading you may well 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 or insurance company BEFORE you start building and construction works and check the cover you have and haven’t got.
(Originally published by Steven Way, 3 July 2009)