There are a range of insurance products available to contractors to cover them for damage that may be caused to buildings, employees and the general public as a result of their activities. Public Liability insurance, for example, whilst not a legal requirement, is vital to protect contractors against the risk of damage to third-party buildings that is judged to have arisen from their own negligence. But even those contractors adhering strictly to best practice can cause damage to neighbouring properties that could not have been foreseen.
Following a landmark case from 1958 (Gold vs Patman & Fotheringham), however, a legal precedent was set stipulating that the employer on whose behalf the contractor is undertaking the works can be successfully sued for damage to neighbouring properties, if negligence cannot be proved. It was this case that saw the birth of JCT 6.5.1 insurance – a niche, yet vital insurance covering non-negligent property damage.
What is covered by a JTC 6.5.1 insurance policy? It’s perhaps not the snappiest or most memorable of names, but JCT 6.5.1 insurance is named after clause 6.5.1 set out in the Joint Contracts Tribunal (JCT) Standard Form of Building Contract. Although it is usually taken out by the contractor, it is placed in the employer’s and contractor’s joint names and protects the employer against non-negligent damage to third-party properties, for example:
- Ground heave
- Weakening or removal of support
- Lowering of ground water
It will usually be paid out after a third-party (usually a neighbour) makes a claim against the contractor’s employer for damage caused to their property. For example, if a property owner has reconstruction or other works done to their property, and a neighbouring property subsequently suffers from subsidence, this kind of situation will likely fall under the remit of JCT 6.5.1 insurance if it is found that the contractor has satisfactorily undertaken the works. Claims may take longer to settle than usual as proving or disproving negligence can be a lengthy process.
What won’t it cover? As previously stated, JCT 6.5.1 is only designed to cover non-negligent property damage, so claims for damage found to have arisen from a contractor’s negligence will not be successful. It is also unlikely to cover small defects that will inevitably rise from building works and may require minor cosmetic repairs – for example blemishes and thin cracks.
Don’t leave your clients unprotected. While a more niche type of insurance, JCT 6.5.1 is seeing higher demand these days, plugging as it does significant gaps in traditional cover to which a contractor may be exposed. It is important that contractors are aware of its importance and are able to explain its benefits to their employers. At Focus, our underwriters are happy to talk about how our comprehensive JCT 6.5.1 policies, with cover provided by both RSA and Tokio Marine HCC, could benefit your clients – so please give us a call on 0345 345 0007, email email@example.com or visit our dedicated webpage for more information about our facility.