Do we need Contract works cover when building work is completed?
Yes JCT 2005 may affect you
When a Residents’ Management Company (RMC) engages a contractor to work on its premises there will normally be agreed terms. Most contracts involving an architect or similarly qualified person will be governed by JCT 2005 (Revision 1 2007) terms and conditions.
Under JCT 2005 there are options to be agreed prior to signing the contract one of which relates to insurance cover.
Section 5.4 A provides that the contractor insures the “works” such as work in progress, materials on site and temporary buildings and plant in the joint names of the contractor and the Employer (RMC)
However, if work being carried out involves the existing buildings then Section 5.4.C also applies, which requires the Employer (RMC) to maintain in his own name a policy in respect of the existing structure. The RMC should ensure that its Insurers are made fully aware of the contract details. Even when Section 5.4A does apply, it is considered prudent for RMC’s to effect contingency cover on the “works” to protect shareholders in the event of failure of the Contractor or inadequacy of its insurance cover.
Residentsline’s policy, underwritten by Norwich Union, automatically provides contract works cover, protecting RMCs up to a contract price of £100,000, without additional charge. For larger contracts there is an option to increase the standard limit for an additional premium. For further details phone Residentsline on 0800 281235 or visit www.residentsline.co.uk
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