JCT Clause 6.5.1 Insurance

Joint Contracts Tribunal (JCT) Clause 6.5.1 of the Standard Building Contract and Minor Works Contract places a requirement on the contractor to organise insurance both for themselves and the client.

This insurance provides cover should there be damage to a neighbouring property due to the works that are carried out, and the cause of which is not the result of negligence.

The case of ‘Gold v Fotheringham’ [1958] set the precedent that the employer of a contractor is responsible for any damage caused to third parties and may be liable to pay compensation.

The contractor will probably already be required to hold public liability insurance, as will an architect, along with professional indemnity insurance, but these policies only indemnify them if the damage has arisen from their own negligence. However, there may be damage with no clear negligence. For example, a neighbouring building may start subsiding a few weeks after demolition works have taken place correctly and professionally. The owner of the damaged building will likely be insured under their buildings policy, but those insurers will be keen to recovery costs from another party, i.e. the employer of the contractor.

The insurance is generally obtained by the contractor on behalf of the employer, with both names on the policy. This is a requirement of the contract, and the contractor will include it within their quoted price to carry out the works as a whole. The employer will typically be responsible for both the premium and any excess payable in the event of a claim.

The risks that are covered are named within the JCT Contract as:

• Collapse.
• Subsidence.
• Heave.
• Vibration.
• Weakening or removal of support.
• Lowering of groundwater.

NB The insurance terms of JCT 2016 are found in Clause 6 and Schedule 3. There are five main types of insurance that may be required:

• Employers’ liability insurance – which protects against Employers' liability for injury of employees arising in connection with their employment (clauses 6.1 – 6.4 JCT 2016).
• Insurance against non-negligent withdrawal of support – which covers potential structural damage to neighbouring property caused by the withdrawal of support (clause 6.5).
• Insurance of the works and of existing structures – which covers physical damage to the works, site materials and existing structures (if there are any) (clauses 6.7 to 6.11 and Schedule 3 JCT 2016) – discussed in detail below.
• Public liability insurance – which covers liability arising from death or personal injury to, or damage to property belonging to, third parties (clauses 6.1 – 6.4 JCT 2016).
• Professional indemnity insurance – which insures against liability arising from professional negligence. Architects, engineers and other professional consultants that owe a design responsibility to the Employer are usually required to maintain such insurance (clauses 6.15 and 6.16 JCT 2016).

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• Latent defects insurance.
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• Professional Indemnity Insurance.
• Public liability insurance.
• Risk register.
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