24 May 2016

Understanding joint insurance

Andrew Reardon, Senior Self-build Account Handler at self-build insurance policy expert ProAktive Selfbuild, dicusses the implications of signing JCT clause 5.4B.

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JCT is an acronym for Joint Contracts Tribunal and is a huge subject. Not the most exciting of subjects I know, but you may well come across this at the beginning of your build and not be aware of the impact on your self-build insurance.

Some builders or even architects may want you to sign a document which effectively adds the contractor as a joint insured to your insurance policy much the same as a wife/husband etc would be. You have no legal obligation to sign the document, nor is there any issue with the contractor asking you to sign it, however it does impact on your insurances should you do so.

Making a claim

By adding the contractor as a joint insured, effectively you waive the insurer’s right to subrogate a claim. So for example, you have the contractor working on site doing some plumbing which involves some hot work/soldering.

The contractor leaves for the night, however the area is still hot and ignites some timber stored in the property. Subsequently the property catches light and the property burns to the ground (a total loss claim). Ordinarily, your insurer will look to claim its losses back from the third-party – in this case, the contractor – however because you signed JCT clause 5.4B, the contractor is treated as a policyholder and the insurer cannot claim those losses back.

Now, this isn’t to say that you shouldn’t sign the clause. However, you must make your insurer aware as it is likely to affect the premium you pay for the policy. Failure to do so may result in your insurer declining your claim as it is a material fact and the insurer will not have collected the correct premium for the increased risk.

ProAktive is an expert in its field and has provided self-build insurance for over 30 years.

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