Question: I am considering a loft conversion but my neighbour has requested my contractor takes out non-negligence insurance as a condition to the agreement / award… what does this mean ?
Answer: Non-Negligent Insurance / 6.5.1 insurance / residential development insurance requires the contractor to take out insurance to cover Indemnity on behalf of you the Employer, typically associated with the Joint Contracts Tribunal Standard Building Contract.
Non-negligent damage occurs when damage or loss has been caused to a third party, namely, an adjoining owner/occupier. Usually a Contractor’s (builder’s) insurance will cover such damage unless no breach of contract or negligence has been exercised by the Contractor.
A request of such insurance would therefore require you the Employer, and the Contractor (in the instance of a joint names policy) to take out an insurance policy to this effect.
However,
In the circumstance of a loft conversion, depending upon the terms of the insurance policy, it may not be of any obvious benefit since such policies do not cover claims that are in respect of reasonably foreseeable events (for Contractors & Designers) and the Party Wall etc. Act 1996, arguably, covers such circumstances though ascertained damages may only be made to a party to the dispute and not necessarily directly to third parties with rights at common law and equity.
Further, if this is indeed a party wall matter such insurance may be irrelevant to your neighbours since they have both the right to seek security for expenses if they are concerned, and the right to that security, as compensation, should any damage occur to their property.
It may be considered unreasonable for adjoining owners’ to request such policy where security for expenses is available to them. In context of personal injury and property damage occurring on different parcels of land i.e. in context of tortious liability of damages such a policy may mitigate confusion in tort where such incidents occur in areas of differing ownership and therefore differing liability. The potential hazards and therefore levels of compensation may far outweigh the levels achieved for security for expenses alone. The insurance would therefore alleviate the concerns of the adjoining owner whom may otherwise be directly considered in a contentious litigation over a serious personal injury or fatality.
The insurance, if valid, will enable monies to be ascertained should damage occur. The acquisition of an insurance policy should be discussed with the insurance provider to ensure claims can be achieved under the proposed schedule of works.
Generally speaking, GFA advises clients to the effect of having a 6.5.1 equivalent policy in effect particularly in demanding projects or where there is a higher possibility of litigation.
Further Reading
5th April 2003 – The Telegraph – Take Cover before the Builder’s Come