A consequence of the recent recession has been an increase in substantial home renovations being carried out as home owners have been less able, or willing, to move. Extensions into basements, swimming pools being added, and other remodelling work, has seen home owners spending large sums of money on their properties. With this comes a significant exposure which clients will look to their brokers to advise them on.
The 1958 court case (Gold v Patman & Fotheringham) established the legal principle that the employer (often the home owner or developer) has a liability in tort for damage to third party property where this is not as a result of negligence by the contractor.
It is important for brokers to consider this, often overlooked, part of standard building contracts. Many contractors do not fully understand the implications of JCT clause 6.5.1 and believe that their public liability cover is sufficient. Here we help you to ensure that your clients are not in breach of their contracts and are not leaving their clients exposed.
What does JCT stand for?
The Joint Contracts Tribunal. JCT contracts facilitate the process of constructing buildings. The contracts set out the responsibilities of all parties within the construction process and their obligations.
What is JCT 6.5.1 cover?
JCT 6.5.1 cover is non-negligent damage to third party surrounding property during the undertaking of a contract as required by a standard form of building contract.
For example: Your client is a home owner and is refurbishing their home. If, as a result of the contractor working on weight bearing walls, there is damage to the structure or foundations of a neighbouring property, and the contractor is deemed not to be at fault, your client will potentially be personally liable for the cost of repairing that damage. Standard home or contractors insurance will not cover this type of cost.
You can help your client, whether they are the home owner, developer or contractor, to cover this exposure with JCT 6.5.1 cover which is usually issued in the joint names of the contractor and the employer and arranged by the contractor.
Non-negligence cover should always be considered for your clients where piling, excavation, underpinning or basement works are being undertaken. It is usually sensible to arrange this cover with the same insurers who arrange the contractor’s public liability cover to avoid delays in settlement of a claim whilst negligence is disputed.
The risks covered are named within the JCT contract as:
- Weakening or removal of support
- Lowering of ground water
What is a standard form of building contract?
A standard form of building contract is a form of contract containing conditions which are applicable, or can be made applicable by the use of alternatives, to a wide range of building projects.
The construction industry and contract users benefit from the use of standard contracts through time savings, cost savings, the fair allocation of risk and the management of common pitfalls surrounding contractual relations in the building industry. These contracts also reflect the benefits that are accrued through precedent meaning that users can be confident that the contracts reflect a generally acceptable position in practice.
Assuming that non-negligent cover forms part of public liability insurance leaves your contracting clients in breach of contract. Building contracts require contractors to arrange non-negligent cover on behalf of their clients. Yutree can offer this cover and have created a Quotation Request Form for gathering the relevant information from your clients. Please get in touch if you have any questions about this or if you would like to discuss a risk.