5 exposures every contractor should know about

 Let’s play a game of worst-case scenario. You’re a contractor. You pay for Contractors Insurance. Then there’s an incident and you need to make a claim. And you realise you’re underinsured.

We hear lots of horror stories about contractors getting caught out due to incorrect cover. So here are 5 common scenarios we think every contractor should know about.

1. Working height (or depth)

 On average, 13 people die every year at work from falling off a ladder. And 1,200 suffer major injuries. In fact, work at height is the biggest single cause of fatal and serious injury in the construction industry, particularly on smaller projects. Over 60% of deaths during work at height involve falls from ladders, scaffolding, working platforms and roof edges, and through fragile roofs or rooflights.

 Now, you might assume that these accidents would be covered by Liability Insurance or as part of your Contractors All-Risk Insurance. But cover for accidents from height can vary and some insurance policies have ‘working height’ or ‘working depth’ restrictions. If you’re not aware of these restrictions and your employees or subcontractors are working at a height above the maximum specified in your policy, this could be a big problem.

Let’s look at a working height example:

The business: A general building contractor

The unintentional mistake: The contractor takes out Liability Insurance to cover employees, self-employed contractors or temporary staff and apprentices for personal injury. But doesn’t realise there’s a working height restriction in the insurance policy of up to 10 metres.

The incident: A roofing contractor working from a height of 12-metres falls, breaking both his legs and dislocating his wrist and shoulder. The roofer is unable to work for 6 months and claims for loss of income as well as personal injury compensation. The claim totals thousands of pounds and isn’t covered by the contractor’s insurance policy. The contractor has to pay for the claim out of company profits and goes into the red.

2. Use of heat

Do you and your workers carry out welding or use torch-on products? Not all policies cover ‘use of heat’ in construction. So, if you’re installing a flat roof or a lead-work roof that requires welding or use of a blow-torch, make sure there aren’t any heat restrictions or exclusions in your policy that would invalidate it.

3. Non-negligence

Taking out insurance for a situation where you have NOT been negligent might seem bizarre or unnecessary. After all, a non-negligent claim isn’t your fault. But, a standard Public Liability Insurance policy only covers you against damage to third party properties or people as a result of your negligence. So what happens if your contract works damage a neighbouring property through no fault of yours?

Enter the JCT clause 6.5.1 insurance which provides cover for the risks outlined in the 6.5.1 Non-Negligence clause of a JCT contract (e.g. collapse, subsidence, heave, vibration, weakening or removal of support and lowering of groundwater). If you’re doing groundwork of any kind, this non-negligent cover is vital but it’s not always included as standard in Contractors Insurance, this needs to be contract specific and in joint names to protect the employer.

Let’s look at a non-negligence example:

The business: A groundworks company

The unintentional mistake: The groundwork contractor takes out Liability Insurance to cover damage to third party properties. But the policy doesn’t include Non Negligent Liability (6.5.1) Insurance.

The incident: Excavation works for a suburban construction project cause lowering of groundwater leading to unexpected subsidence in 3 nearby buildings due to the loss of support from the water-saturated soil.  All 3 companies have to stop trading and make claims for disruption to business and to fix the subsidence resulting in extensive claims costs which isn’t covered by the contractor’s insurance policy.

4. Timber frame construction

In recent years, use of engineered timber frames for new buildings has caught the headlines due to a number of high profile fires. Timber-frame fires are more likely during the construction phase, because the unprotected frame is exposed making it vulnerable to ignition and rapid fire growth.

Not all contractor insurance policies cover timber frame construction which could lead to gaps in your cover. A good broker should ask lots of questions about the type of work you do to avoid any risk of exposure.

5. Basement construction

Finally (and rather aptly), right down at the bottom of the list is basement construction. If you’re building a basement underneath an existing property, some insurers won’t insure you. So if you have Contractors All Risk Insurance but you haven’t specified basement construction as a risk, you might not trigger policy conditions.

So what now?

Want to feel more confident about your Contractors Insurance (and access the best prices from the whole insurance market)?

Email Barry or call on 0118 916 5480