JCT Contracts And Renovations Insurance

JCT have created standard form building contracts since 1931, producing template contracts and guidance notes for use by the construction industry. JCT is the UK’s leading producer of standard forms of contract

JCT Contracts and Renovations Insurance

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A building contract sets out the responsibilities of all parties and their obligations in the construction process. It makes clear what work needs to be done, who is doing it, when are they doing it by, and for how much.

Why a standard form?

It saves time
It minimises cost
It allocates risk in a fair and recognisable way
Standard forms are designed in a way that is comprehensive, and cover most of the pitfalls which surround contractual relations in the building industry
JCT contracts are developed via a cross-section of the building industry involved in the contract process. This means that clients (private and public sector), consultants, contractors, specialists, and sub-contractors are all involved in the development of JCT contracts.

How does it affect insurance?

The most important part of any JCT contract from an insurance perspective, is that it will set out who is responsible for arranging what aspects of insurance on a project.

Understanding this properly has two benefits for the client. It saves them from paying out extra in insurance for something already covered elsewhere, and also makes sure they are not exposed by any gaps in cover.

A glance at the JCT website shows the number of contracts available, which can get very confusing very quickly. As a starting point, you will want to understand which JCT contract is being used (such as JCT Minor Works 2016) and the insurance term (such as 5.4C).

If you’re able to provide this to a company with a good understanding of renovation insurance, they will be able to let you know what your insurance requirements are, and arrange your policy accordingly.

The main consideration is whether or not a Joint Names policy is required. They are common on building contracts involving renovations and extensions, where it is normally taken out by the property owner and building contractor. Typically this covers both the existing structure and the works themselves, and means the property owner is entitled to the proceeds of a claim made under the cover.

In this example, you are covering for the work in progress as well. If your house costs £150,000 to rebuild, and you are adding a £50,000 extension, the total rebuild cost being insured by the policy is £200,000.

If you don’t insure under joint names, then generally you as the property owner would insure for the property as it is before the work starts, leaving the contractor to cover any ongoing work on their Contractors All Risks insurance policy.

The main disadvantage of a Joint Names policy is that you are effectively insuring the same risk twice, and paying more for it as well. Using the above example, your rebuild cost is increased by a third to accommodate the renovations amount, meaning your insurance cost will also increase by at least a third. If you are working with reputable and experienced building contractors, you can expect that they will hold public liability insurance and Contractors All Risks cover as a minimum.

This is an option that may be suggested or considered if the contractors do not have adequate insurance in place, so it is worth asking the reason they’re recommending this to you.

If a Joint Names policy isn’t required, then it’s likely the cover you need is for existing structure only, i.e. you will cover the property as it is before works begin. Any aspects of the work itself will be covered by the contractor. This includes materials, hired in plant, any accident or injury to anyone working on site, and cover for part-built structures that haven’t been signed over to the homeowners yet.

Whatever your situation, GSI Insurance Services (Southern) Ltd. are well versed in arranging insurance policies to fit around JCT contract requirements, and will be able to arrange the right cover for you. Give us a call on 0800 612 9376 or click “Get a Quote” to complete our online form.

Need some more information?

Why not read one of our other renovation insurance guides?