INSURANCE ADVICE
WHILE COMPLIANCE WITH INSURANCE REQUIREMENTS IS NOT STRAIGHTFORWARD, WHEN A TENANT ENGAGES A CONTRACTOR, BROWN & BROWN CAN PROVIDE ADVICE AND ARRANGE COVER AS REQUIRED, SAYS EXEC DIRECTOR TREVOR MCCLINTOCK…
JCT design & build contracts: Insurance of existing structures
JCT Insurance Option C requires the employer to maintain a joint names policy for existing structures. However, for an employer who is a tenant of a multiple occupancy building, the landlord usually insures the existing structures with the premium recovered from the tenants of the building through the service charge. There is no standard form C.1 replacement schedule. In some circumstances, the employer’s landlord may agree to include the contractor as a joint name on its insurance policy for the existing structures, but this is rare. Instead, most C.1 replacement schedules ask the contractor to cover all or part of the risk in respect of the existing structures through the public liability insurance, which the contractor is required to maintain under clause 6.4 of the JCT DB. This is fine for
smaller existing structures but, potentially, the overall value of the existing structures plus the contents could exceed the contractor’s public liability insurance. In these circumstances it is usual to ask for the contractor’s public liability insurance to respond up to an agreed level and the landlord’s insurance to respond over that amount. The contractor will also need the C.1 replacement schedule to include an indemnity from the employer in respect of any excess claims. If the contractor is not a joint name to the existing structure’s insurance policy, the landlord’s insurer will have a right of subrogation against the contractor, allowing the insurer to step into the shoes of the landlord and bring a claim against the contractor for amounts it has paid out over the contractor’s public liability insurance.
Trevor McClintock, Executive Director, Brown & Brown.
Suggested clause to add to contractor’s standard contract: Where the employer is unable to comply with joint names requirement on insurance of existing structures including contents, the employer shall at their own expense make alternative arrangements to indemnify the contractor in respect of any loss or damage to existing structures including contents, howsoever caused. T: +44 (0)28 9344 6347 www.BBrown.com
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