6.5.1 Insurance Cost
Chiquita Mcnicholas
JCT 6.5.1 Insurance is a specific type of insurance policy commonly used in the construction and contractors industry. JCT stands for Joint Contracts Tribunal, which is a widely recognized organisation that produces standard forms of contract for construction projects in the UK. 6.5.1 refers to a specific clause in a JCT contract which covers non-negligence issues.
JCT 6.5.1 insurance, also known as non-negligence insurance, is specifically designed for situations where construction is ongoing and a non-negligent incident arises. It provides coverage for incidents that cannot be attributed to any specific individual due to their inherent nature. This means that even if the contractor followed all procedures perfectly, unforeseen losses or damages may still occur. JCT 6.5.1 insurance can be part of a wider JCT insurance policy, or cover in its own right.
Cover can also include non-negligence issues that affect neighbouring properties as a result of your construction work. The most common example of this is when a neighbouring property in a commercial building, block of flats, semi-detached or terraced house is damaged when works are being carried out, even if the builder did nothing wrong.
A contractor was undertaking demolition and refurbishment works at three 18th century properties. Two of these were to be demolished and rebuilt, while the third was to be underpinned and refurbished. A JCT 6.5.1 insurance policy was issued in the name of both the employer and contractor.
In the property being refurbished, plaster was removed from a section of brickwork and shortly after this, a section of brickwork fell out of the chimney. Cracks developed, and after two weeks, damage was at such a level that a dangerous structure notice was served, resulting in a requirement for demolition of the property.
The advice of expert engineers was sought, and the opinion was that collapse was inevitable, although this could not have been reasonably foreseen. Therefore, indemnity was provided under the JCT 6.5.1 policy.
At Forum Insurance, we can work with you to create a JCT 6.5.1 insurance policy which includes the right level for cover for your construction project. Contact us today for your quote. We also offer comprehensive JCT insurance cover, as well as a range of policies for the construction sector. They include contractors combined, legal indemnity, self build and property owners insurance.
We use cookies to ensure we give you the best experience on our website. You can find out about our cookies and how to disable cookies in our Privacy Policy. If you continue to use this website without disabling cookies, we will assume you are happy to receive them. Close.
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 recover 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.
JCT 21.2.1/6.5.1. Insurance cover protects an employer against expense, liability, loss, claim or proceedings which he may sustain by reason of injury or damage to any property caused by collapse, subsidence, heave, vibration, weakening or removal of support or lowering of ground water arising out of or in the course of or by reason of the carrying out of building works undertaken on his behalf.
A prudent employer will ensure that all contractors and/or professionals (e.g. architects, consulting engineers, etc) engaged on his behalf in a building project hold Public Liability Insurance to cover the risk of a claim being made against him for injury to a third party or damage to their property arising from the negligence of the contractor and/or professionals during the course of the build.
However, in the absence of negligence being proven, Public Liability cover will not respond to any such claim and as a consequence the employer could be left to face a substantial monetary claim against him without the protection of an insurance policy. JCT 21.2.1/6.5.1 Insurance is available to ensure that an employer is not left exposed in this way.
Under the terms of a JCT contract, the contractor may be required to effect and maintain a joint names JCT 21.2.1/6.5.1 insurance policy. The contractor will be responsible for paying the premium and complying with any policy conditions that apply, but the cover provided by the policy is solely for the benefit of the employer.
Inspired Underwriting Ltd is Authorised and Regulated by the Financial Conduct Authority
We are members of the Financial Ombudsman Service who provide an independent review of complaints for eligible complainants.
The FOS Consumer Helpline is on 0800 023 4567 and their website is at: www.financial-ombudsman.org.uk
JCT Clause 6.5.1 requires insurance to be arranged in respect of any expense, liability, loss, claim or proceedings which the Employer may incur or sustain to any property (arising out of the contract works) caused by:
The Coronavirus (COVID-19) has created complications with JCT Contracts. We have made some relevant updates to this guide, including updates to the complication of JCT Contracts and Termination of contracts sections of this article.
In the past, within construction, the insurance industry preferred the Employer to insure the existing structure of a building being renovated and the Contractor to insure the works done. However, this would lead to many disputes on how claims would be settled.
JCT Contracts and JCT Insurance, otherwise known as 6.5 1 Insurance, now covers a suite of contracts used by the building industry to help deliver your construction project. The JCT Contracts are standard forms that are written in joint names laying out the responsibilities for both parties (the Contractor and the Employer) within the process of the build and their obligations towards each other.
Since 1931, the Joint Contracts Tribunal (JCT) has produced contracts for the UK construction industry used to avoid conflicts and disputes. It seeks to set out the responsibilities of all the parties involved in the process of the build.
The Government has published a COVID-19 supplier relief for Procurement Policy Note (PPN). The updated PPN is to ensure business continuity for suppliers up until 30 June 2020. This construction specific guidance suggests various ways in which contracting authorities could assist their supply chains, these include
With these changes, we advise contracting authorities to take legal advice before amending any of their contracts, this will include the JCT Insurance. To ensure that any contract changes reflect any bespoke amendments that may be made to the standard form of contract. You will also need to ensure amendments are clearly restricted to the period for which the contracting authority wishes to provide relief and that they are consistent with the rest of the contract.
Under Option A there is always the risk of the Contractor going into administration during the building works and being left with an incomplete build that is not insured. When the insurance is arranged by the Contractor and they are there one day and gone the next you can come into all sorts of problems.
In the case of implementing Option A, it would be recommended to seek a parent company guarantee where the Contractor is part of a bigger Group. You should also look at securities, such as Performance Bonds and Collateral Warranties. The claim on a Performance Bond will cover you for losses sustained in the event of insolvency and Collateral Warranties will provide a level of protection with regards to future defects in the works.
Bluedrop are construction insurance brokers with specialist knowledge in JCT Contracts. If you require any further advice or information on this subject please contact us and we will be happy to help.
From a prudent point of view we would recommend Employers insure the works themselves, with either Option B or C, and maintain control of factors such as what is covered, timelines, costs and claims handling. Taking responsibility for JCT Insurance also allows the Employer to insure against any financial loss as a result of delays in completion of the project.
If you are unhappy with our service we have a complaints procedure, details of which are available on request by contacting us on 01489 222 897 or alternatively by clicking Make a Complaint above.
You may be able to refer a complaint to the Financial Ombudsman Service (FOS) if you are unhappy with how we deal with your complaint. The FOS website is www.financial-ombudsman.org.uk
Bluedrop Services (NW) Limited Company No: 7287668 Registered Office: Unit 4 Flanders Road, 1st Floor West Wing, Royal London Park, Hedge End SO30 2LG.
Bluedrop Services (NW) Limited is authorised and regulated by the Financial Conduct Authority. Registration No. 530244. You can check our registration by contacting the FCA on 0800 111 6768 or by visiting www.fca.org.uk/register.
What does non-negligence insurance cover?
JCT 21.2.1 Insurance protects against expenses, liability, loss, claim or proceedings which may arise as the result of an injury or damage to any property which is not directly attributable to a negligent act. Often this type of problem arises out of work involving demolition, excavations, piling or underpinning as this can lead to damage to neighbouring properties including subsidence, heave, vibration, removal or weakening of support or lowering of groundwater.