J001362 - Lycetts Newsletter Jan 2025 FINAL - Flipbook - Page 11
BU I L DI NG WOR K S
C A N BE A R ISK Y
BUSI N ESS
Tim Coulson
Associate Director,
Edinburgh
Building renovation projects are commonplace on farms and estates and will undoubtedly be
under consideration by many as businesses diversify and personal circumstances change. Extensive
building projects, by their very nature, are high risk. It is therefore vital to have the correct level
and type of insurance cover in place before building work commences.
Regardless of whether planning a residential or
commercial development project, big or small, it is
highly likely to require specialist insurance,
especially if involving a heritage or listed building.
Many property owners when embarking on such
works believe their contractors‘ ‘All Risks’ policy will
provide adequate cover, but this is rarely the case.
The contractor’s policy will be in their own or
company name and so indemnifies the contractor
for any losses that affect the business, not
necessarily the property owner.
The basis of the contract between the principle and
the lead contractor is key. Works arranged under
Joint Contracts Tribunal (JCT), Royal Institute of
British Architects (RIBA) or Scottish Buildings
Contracts Committee (SBCC) will outline the basis
of insurance required and where the insuring
responsibility lies. Depending on which clauses are
operative, it may be that that the contractor is
made responsible for insuring the entire building
via their Contractors All Risks policy. However, this
is unusual, and even if this is the case, there are
numerous risks that come with delegating the
insurance responsibilities of any existing structure
to a policy that you do not control or monitor, even
when such a policy is in joint names. For example,
should the contractor cease trading for whatever
reason during the contract term, there is no insured
entity to pick up a claim.
Contract works insurance can be complex with
severe consequences if not arranged correctly.
Keeping your insurance broker well informed at
least 30 days in advance of any such works is vital.
Insurers will require extensive and detailed
information on any renovation project before
agreeing cover. Depending on the nature and scale
of the proposed works, fire and water management
plans as well as property condition reports may be
required. These can take a great deal of time to
produce and can delay the commencement of a
project if left until the last minute.
As with all insurance policies having accurate sums
insured is vitally important. Getting this reviewed
as part of any tendering process is a good
opportunity to ensure up-to-date values and to
avoid the dangers of underinsurance. Where
large-scale projects on listed heritage buildings are
proposed, it may be that the insurer can provide a
pre-cover survey to clarify, providing peace of mind
for all parties as addressing issues retrospectively
tends to prove a more expensive option.
Rarely does any building project go exactly to plan.
Good communication with your broker is therefore
vital throughout so that potential pitfalls can be
identified and adaptations made as the project
evolves.
So, whatever your renovation plans, be it a new
house for family members, or the conversion of
farm buildings for a new diversification project,
seek the advice of your broker at the earliest
possible opportunity so you can proceed with the
confidence of being covered should the unexpected
happen.
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