Q: For a house under construction, would the building work not require a different type of insurance to that required by my lender? If I use contractors do they not have their own liability insurance?
A: Your bank or mortgage lender will want to know that everything to do with the works is properly covered with no gaps, not just the liability of the contractor.
The contractor’s responsibilities and what they are covering should be laid out in the contract’s wording. This is why properly detailed contracts should be used for the work and also for any variations to the work, all of which should be properly noted and documented. Even if the contractors say they are fully covered:
- Demand to see an original policy or a letter from a reputable broker conﬁrming the cover is in force and for the period of your contract.
- Make sure an A-rated insurer sits behind the policy.
It may be that the contractor has his own insurance but that it’s limited to just liability cover which effectively means that negligence will need to be proven for a claim to be paid. Under that type of cover anything else such as plant, materials etc., will not be covered by them.
In reality even if you have a main contractor there is still a good chance that there will be elements of the project that need to have the beneﬁt of a proper site insurance policy. Why? Because very few self-builders do not do a thing when it comes to their project even if it is internals only. Friends and family can fall off ladders. Without proper cover the project could soon run out of funds waiting on claims to be paid.
Paul Kempton of selfbuildzone.com