the importance of public liability insurance
By Paul Harrison, associate director, Belmont International Limited.
Insurance is not the thing that will spring imme- diately to the minds of most selfbuilders when they are considering a new project. However, it can play an important part in the success of a project. A selfbuilder will need to consider public lia-
bility insurance for when the site is first acquired, then for the build phase they will need site insur- ance. In addition, a structural warranty for a period of ten years from the completion of the project may also be required, particularly where mortgage finance is required. Structural warranties are cheaper in premium
cost and easier to arrange the earlier the poten- tial insurer is involved, as they can survey the site throughout the build, thus ensuring the build has been completed to the correct standards. If you are considering selling your property at a later stage then future mortgage lenders will look for there to be a structural warranty in place. Once a site is acquired, it is important that
public liability insurance is arranged. The self- builder becomes legally responsible for the site and the safety of any one who may be on the site, even if they are not meant to be there. This policy protects the site owner against claims made for injury to a person or damage to sur- rounding properties. There are circumstances where, due to rights of way, the general public will have access to a plot, so it is very important to arrange this even if the build of the project is someway off due to the need to obtain plan- ning permission. Once planning has been granted and the
project is to begin, site insurance should be arranged. With a number of providers it is pos- sible to convert the public liability insurance very simply into site insurance. The site insurance pro- vides cover for all risks of loss or damage to the site, including the structure of the building as it is built along with the materials: this cover would include theft and malicious damage, storm or flood damage, as well as fire. Also covered on the same basis is the construction plant and tools, which are either owned by the selfbuilder or hired in. If the selfbuilder is living on site in a caravan or temporary building, then cover will be provided for their personal belongings. It is important that cover is arranged at the ear-
liest stage of the build, as it can become more difficult to cover the further the project has pro- gressed. Policies are generally issued for an ini- tial period of 18 months. If for whatever reason a project stops, it is important that the insurers are advised as cover restrictions can sometimes
occur when works have stopped for longer than three months. The insurers will calculate the pre- miums based on the contract value of the devel- opment. If there are existing structures, say for a barn conversion or outbuildings, these can also be included within the site insurance. The site insurance will also provide both pub-
lic and employers liability insurance to cover injury or illness caused to contractors, other peo- ple on the site, or damage to another party’s property. It is a common misunderstanding that the selfbuilder can rely on the contractor’s own insurance policy. Firstly the contractor’s policy is in place to protect him and only for the work he is contracted to do: it will not cover the whole project or the selfbuilder. Secondly, the majority of selfbuilders do not enter into a Joint Contracts Tribunal or similar contract with the contractor, which would be specific on insurance responsi- bilities, so the selfbuilder will be responsible for all contractors, workmen or friends and volun- teers that are on site. It is good advice to have a written agreement with the contractors, spe- cific on who is responsible for what. Always ask for proof of the contractors own public liability insurance cover. It is also good advice to check the site before work starts, for underground cables and pipes, as the most common public liability claim is where a selfbuilder has dug through underground cables or pipes, and it is not unusual for the utility companies to charge hundreds, if not thousands of pounds for them to be replaced. If you are undertaking complex work yourself
rather than using a contractor, you should be suitably trained. Numerous serious claims have
been made where selfbuilders have not done this. An example of this is a selfbuilder who erected his own scaffolding, which then col- lapsed when two contractors were working on the building. Due to the injuries they sustained, the claim exceeded £500,000. By far the two greatest risks for selfbuilders
are fire and injury to contractors working on the site. Under
Self-Builder.com’s insurance scheme alone, in the last five years a total of £2.2 mil- lion has been paid out in respect of fire claims and £1.6 million for injury claims. Selfbuilders are taking on some serious res-
ponsibilities and potential liabilities when they commence a project. Site insurance enables self- builders to protect themselves financially from the consequences of a serious incident occurring. Without this insurance a selfbuilder could find themselves in the position of having insufficient funds to complete a project, or worse than that, are personally liable for the cost of compensa- tion to an injured person. In the current litigious society, claims are now very common for slips, trips and falls, and it can take months if not years for them to come forward. Claims can be received long after the project is complete. Although insurance may not be an exciting
part of the project, it provides the ability for self- builders to acquire the plot of their dreams, to enable them to sell on the site in the future by providing structural warranties, and it ensures the structure of the new property can be rein- stated in the event of a catastrophe. But most importantly of all, insurance ensures that those working on your site will be compensated.
Enq. 161
selfbuilder & homemaker
www.sbhonline.eu
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