Construction insurance—overlap between the works and existing buildings
Produced in partnership with Fladgate LLP
Construction insurance—overlap between the works and existing buildings

The following Construction guidance note Produced in partnership with Fladgate LLP provides comprehensive and up to date legal information covering:

  • Construction insurance—overlap between the works and existing buildings
  • Work in or adjacent to other buildings
  • Insurance required by JCT or otherwise recommended
  • Consequences for the contractor
  • Consequences for the sub-contractor
  • Consequences for the employer
  • Work in or adjacent to other buildings

Work in or adjacent to other buildings

A contract for insurance may cover damage to property caused by an insured risk, for example buildings insurance or contractor’s all risk insurance. The insured risk may be an act of God, or it may be caused by negligence.

Alternatively, an insurance policy will cover liabilities incurred in law, for example causing injury, death or damage to property by negligence. The insured event must be something which creates a liability in law, ie a tort. Public liability policies do not cover pure accidental damage, unless negligence is present. Public liability policies also commonly exclude liabilities undertaken under contract which would not have existed absent the contract.

In order to insure a building, the person taking out the insurance must have an insurable interest in the property. Generally the insurable interest is ownership of the building or, in the case of a mortgagee, a financial interest in the building. See Practice Note: Insurable interest.

In the case of a contractor, its insurable interest in the works is its contractual obligation to take care of the works until completion. Without that contractual obligation to take care of the works, a contractor has no insurable interest in the works. The contractor is therefore only liable, in respect of the works, for its own negligence causing damage.

In respect of