contractors and craftspeople working on historic and listed buildings
need a raft of specialist skills and equipment, so their administrative
support systems need to reflect that specialism and protect them
in the modern world of liability and litigation.
1920s cinema in Whiteladies Road, Clifton, Bristol: redundant
historic buildings pose complex insurance issues both when
empty and when being conserved or converted to a new use.
policies are a key cornerstone of that protection. The more you
understand the insurer's point of view, the better you can manage
your actual and perceived risks to secure better insurance terms
and premiums. It is perfectly possible to buy an off-the-shelf
standard business or construction policy to cover the basic areas
of liability. However, these policies may provide adequate cover
for damage caused to a modern building, but not for one constructed
of traditional materials and hand run plasterwork, for example.
All of us involved in conservation and heritage have a responsibility
to protect both the tangible and intangible values of the buildings
we work on, as well as the people affected, so the advice of a
broker who appreciates what we do, and the attendant costs in
doing it, is necessary if an appropriate level of cover is to
be arranged. Unfortunately,
few insurers are sufficiently interested in this field to provide
policies which offer adequate cover.
Historic buildings can be
extremely expensive to repair, and during a programme of refurbishment
or conservation they are exposed to greater risks than normal,
making some insurers wary. There is, for example, the increased
risk of theft and arson if the building is left empty during the
works, and historic fabric may hide structural faults which pose
a risk to the people on site, as well as to the future of the building.
Furthermore, the dearth of specialist contractors and craftspeople
means that sensitive work is often carried out by people who simply
do not understand what they are doing.
Insurance for conversion
work is a particular problem. Although most insurers are happy
to insure the buildings once converted, the insurance capacity
for cover during the preceding period is depressingly low.
engaged in commercial property renovation and restoration also
find it almost impossible to get any meaningful level of insurance
and quite often end up proceeding with contracts that provide
little or no insurance for the existing structure at all.
working on private houses regularly face problems getting insurance
that complies with standard contract conditions, such as those
of the Joint Contracts Tribunal (JCT). If the house is privately
owned, it is likely that JCT conditions will be used to govern
your contract with the householder. The conditions often request
that the policy is held in the joint names of the contractor and
the property owner, which makes household insurers wary because
it leaves them with no third party to sue in the event of loss.
INSURANCE DO I NEED?
structure cover. Owners
who are renovating their house themselves will need 'existing
structure' cover. If a contractor is employed, standard construction
contracts require the cover to be held jointly with the owner.
However, adequate cover for existing structures can be expensive
and, in some cases difficult to obtain due to their vulnerability
when unoccupied or undergoing renovation or restoration.
is compounded when the property concerned is listed or constructed
from unusual or inflammable materials (timber framing or cladding,
thatch, wattle and daub, clunch or cob for example). In this case
you'll need an insurer who has spent time cultivating markets
to deal with these types of construction.
most difficult cases arise where a building is being converted
to an entirely new use. Recent examples include the conversion
of churches into flats, former public buildings such as swimming
pools into offices, and even an industrial chimney to a private
house. These developments represent significant challenges for
insurers and require careful broking to ensure that the merits
of each particular risk are brought through to entice the insurer
to provide better cover. When quoting for this type of work, try
to put yourself in the shoes of an underwriter. Is the site easily
secured? What is the neighbourhood like? What are the original
construction materials? What sort of condition is it in now, and
how will it have deteriorated by the time the contract starts?
Take some photographs, warts and all, of the building for your
records, and forward them to your broker; pictures really do tell
a thousand words.
liability. A significant area of concern for any main contractor
should be their subcontractors' insurance provision. If the subcontractors
are labour-only, and do not carry their own insurance, then it
is highly probable that the main contractor's insurance will operate:
you effectively become their employer and need employers' liability
cover. Where bona fide subcontractors (providing both labour and
materials and carrying their own insurance) are engaged, make
sure that all relevant liability covers are in place, and also
that there are no onerous policy conditions such as 'application
of heat' warranties that are likely to negate the subcontractors'
cover if they cause a loss through negligence.
liability. For buildings in poor repair, the period prior to
renovation is a concern for many insurers. Poor lighting (if any),
water ingress, rotten timbers, and falling masonry are all areas
for potential claims against the owner or contractor by anyone
on the site, invited or not. This could range from building inspectors
to vandals. As your common-law liability to each remains the same,
it's as well to remember that you can't contract out of personal
injury or death. The contractor's liability for safety on site
starts on day one of the contract, so be prepared to shore up
and restrict site access first before starting work.
All Risks) cover. This
is insurance for the works in progress and acts to fill the gap
between the cover for the property as it was and as it will become.
Make sure that your sum insured is adequate for the contract as
most CAR policies carry an inner limit for project costs. In practice
this means that the figure should exceed the value of the contract.
Although it's arguable that demolition costs could be excluded
from this, the savings gained by attempting to strip this out
are minimal. Be aware, too, that the costs involved in restoration
following a loss may well be unusually high, and that the initial
projected costs can and often do overrun. Leave yourself 25 per
cent over and above your largest contract.
plant cover. Under
Construction Plant-hire Association (CPA) conditions you are required
to insure for the replacement value of the plant and equipment
that you are hiring. You will also be liable for any continuing
hire charges that accrue whilst plant is being repaired or replaced.
Make sure that only correctly trained staff use hired-in plant
as the HSE is becoming increasingly intolerant of accidents involving
operator error where inadequate training is a factor.
YOUR RISK EXPOSURE
of the risks and the insurance policies of others involved in
a project may help to reduce your premiums and ensure that the
level of cover is suitable.
conditions. Check your subcontractors' policies for warranty
conditions affecting the use of naked flames or heat-generating
machinery such as blow-lamps, heat guns and even space-heating
equipment. If a policy does not specifically exclude their use,
warranty conditions will usually apply. These often place the
onus on the policy holder to cover any inflammable materials prior
to work starting, carry fire extinguishers with them, and revisit
work up to an hour after completion to check that no materials
are smouldering or burning. If this warranty is breached, it is
highly likely that the insurance will fail to operate in the event
of a claim, leaving you with a very angry client. Take a copy
of your subcontractors' schedules and satisfy yourself that they
are adequately insured. If in doubt, ask your broker.
warranty conditions. In addition to heat warranties, check
subcontractors' policies for limits on working height as most policies
apply a restriction of sorts. Although the use of access equipment
has improved safety in recent years, the enforcement of insurer
warranties and HSE requirements has become more aggressive.
inexperienced clients. It can be dangerous to assume that
your client's insurance is adequate. Some insurers place a limit
on the size of contract they are prepared to see undertaken while
their policy is on standard terms, and owners are often unaware
that they may need to purchase additional insurance for the duration
of the works. Indeed, they may not even have advised the insurer
that work is taking place. Another problem is that, because insurance
in this sector can seem expensive to non-business buyers, some
clients may simply close their eyes in the hope that their existing
arrangements will be enough. Make sure that you exchange correspondence
which makes it plain who is insuring what, whether or not this
is stated in your contract. Apart from
the risk that the client may not have fully understood the contract,
JCT minor works contracts are often used on projects that are
much larger than the contract was intended for. If you are in
any doubt as to the ability of your client to administer this
important aspect, request details of their insurance and pass
it to your broker to verify the suitability of the cover.
who don't understand the problems. Many insurers produce standard
products for the building industry; these range from large-scale
Contractors All Risks policies to single project small-works insurance.
The vast majority, because they are driven by standard practice,
deal badly with the issues of listed and heritage buildings. For
example, if you worked on a stately home and caused it to burn
down, your indemnity limits for fire could be set artificially
low at say £1 million; whereas a reinstatement using authentic
materials and techniques could easily cost £3-4 million. Therefore
it is vital that if you specialise in this area of construction,
you advise your insurers accordingly or seek out a specialist
broker; you may also find them useful in helping your clients
with insurance problems to enable work to go ahead.
Ground movement or subsidence is a difficult area for insurers
of properties in poor condition. It is often unclear what damage
is caused by neglect rather than genuine subsidence and therefore
most are unwilling to give cover other than for fire. Some policies
will offer wider cover at a price, and some homebuyers are pressed
into unnecessarily expensive distress purchases to fulfil lenders'
requirements. If you are involved in pre-sale estimating, advise
your client of these issues and put them in contact with a specialist
broker as early as possible, bearing in mind that the property
must be insured from the moment sale/purchase contracts are exchanged.
properties. Where properties in separate ownership share elements
of structure or fabric, such as the dividing wall in a terrace,
cover for accidental damage to the adjoining premise must be factored
into the insurance programme. Don't presume that the property
next door is in good condition: it should be surveyed and its
condition recorded prior to the commencement of works and, if
necessary, extra work should be carried out to ensure its safety.
When quoting for potential work, consider site security from the
insurer's perspective. Be mindful of preventing malicious damage
and theft, as well as accidents which could lead to personal-injury
claims. The insurer will be happier dealing with an unoccupied
site that is adequately guarded and boarded up than with a property
with open access. As a minimum you should consider:
- boarding up
ground-floor windows and doors, and any first-floor window with
- water, gas and electricity should be suspended
- erecting signs that alert visitors to the potential dangers
plant that could cause damage or injury.
In the tricky area of
renovating period or listed properties, many insurers are reticent
at best; although some companies do have an understanding of the
area. The best way to secure the right cover at realistic rates
is to go through a specialist broker who can:
- help you manage
the risk to improve the proposition to the insurer
- act as your
advocate and give the insurer a detailed picture of the risk
you through the trauma of a claim.
When a loss occurs it's a heart-stopping
moment, and probably not one you'd wish to face alone.
article is reproduced from The Building Conservation Directory, 2007
is a director of specialist broker La Playa Ltd, and has
been involved in the insurance of listed buildings in the
estates and construction sectors for over 15 years.
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