Non Negligence Insurance (also known as JCT Clause 6.5.1) and part of the Standard Building Contract and Minor Works Contract is taken out to protect neighbouring third party properties from damage or loss during the construction period of a project (or works) but not caused by anyone’s fault or negligence.
To illustrate an example, one of our clients owned a property next to a big development of a block of new build residential flats. At the groundworks stage, cracking appeared externally at our clients’ property which was attributed to the works being carried out next door. Neither employer nor contractor were responsible for such damage as the work had been carried out exactly to plan and specification therefore neither party was deemed to be negligent or liable.
Normally the insurance policy is bought by the contractor on behalf of the employer (or client) and in joint names (on the insurance policy) and is included in the cost as part of the tender although sometimes the employer does take out the insurance directly.
Generally, the policy is arranged on project specific basis however annual policies may be purchased by a contractor dependant on the number projects (of the contractor).
What is covered?
The policy covers the employer for any damage or loss caused to any third party property in the vicinity arising from the works and caused by:
- Storm, flood and weight of snow
- Escape of water or oil
- Impact by aircraft or items dropped by them
- Collision from an animal or vehicle
- Falling objects – trees, telephone poles, lamp posts, radio aerials and satellite dishes & masts
Cover can also extend to protect the employer’s own property or structure but not arising from the contractor’s negligence. In this case, the contractor’s own Contractors All Risks insurance policy (under the public liability section) would deal with a claim arising out of such a situation. Know the difference between Contractors All Risk Insurance and Contract Works.
When does the insurance need to be arranged?
It is vital that the policy be arranged prior to the works commencing otherwise it does prove to be increasingly difficult to secure insurance cover the further you are into the development.
To arrange this type of insurance can be quite complex, particularly in the gathering of information about the contract, so professional advice in the setting up of the insurance policy would be required and recommended.
Titan Insurance has over 30 years experience in Construction Insurance including arranging Non Negligence Insurance in the insurance market.
Our Construction Team with its extensive knowledge and contacts can be reached on 0207 731 3700 or drop us an email.