Is getting Builder Insurance even worth it?

Life on a construction site has certainly changed in 2020. Or at least it should be where at all possible. Covid-19 led to a nationwide lockdown which of course had a huge knock on effect to the construction industry. Times are tough but this doesn’t mean one should forget taking out a good builder insurance or trade insurance policy.

Sites had not been forced to close this year, but contractors had to implement all sorts of new measures to protect their employees. Before we go in to some of those measures, this inevitably meant one thing as a starter, the whole build process would take a lot longer that it did before with the extra measures that were introduced.

Sites have had to implement:

  • Social Distancing – slowing down certain processes that would normally take half the time
  • Provide extra PPE (delays inevitably occurred in getting this equipment)
  • Adhere to new rules that may be enforced by contractors
  • Reduce the number of staff on site at any one time or in a particular area
  • Staggered site hours to reduce congestion at peak times on public transport (as per Guidance from Ministry of Housing, Communities & Local Govt.)

You can see this all led to a much more inefficient ways to run a building site. This is not even considering employees that may have to self-isolate due to a new cough, something that we all have ‘worked through’ in the past, now requires time off work. This leads to lost man-hours on site and causes further delays.

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Just like shops and super markets the supply chain has been severely disrupted for the construction industry. Where shops have been unable to get a hold of hand sanitiser gel, some medicines and even toilet rolls during lockdown, the construction industry is also heavily reliant on an unlimited supply of construction materials. This is a contractor’s worst nightmare at the best of times – delays in getting materials. With the supply chain severely interrupted during lockdown and the prospect of another (in some shape or form), Covid-19 inevitably led to lockdowns resulting in reduced access to many materials including:

  • Concrete
  • Timber

Insurance

Many contractors had attempted to make claims on their CAR policies/DSU (Delay in start-up) to compensate for losses due to site closures or delays to projects being completed. While each policy would be looked at individually, coverage under such policies for Covid-19 was not clear before this year.

Considerations of insurers may include when assessing a BI Claim under a Builder Insurance Policy:

  • Does COVID-19 fall under the infectious disease extension?
  • Was the disease confirmed as present at the actual site?
  • Has there been an outbreak of Covid with a certain radius of the site?

These are just some of the questions, loss adjusters will need to ask and consider before insurers make any decision.

The easing of lockdown has of course opened access back up again to near what it was before. At this stage we are all hoping such harsh measures are avoided – but with winter approaching surely everything is on the table!

FCA test case

A more recent development is the ruling of the FCA Test case which took place in July. The FCA used several policy wordings from certain insurers and brought their case to the High Court in order to provide clarity as to whether or not certain policies gave Business Interruption cover due to the effects of Covid-19. Based on the sample of wordings presented by the FCA, the court decided most, but NOT ALL, of the disease clauses provide cover for losses connected to the pandemic. Some relief at least for those with builder insurance– so it is still a case of submitting a BI claim and seeing how your insurer deals with it. Before the test case, many insurers simply declined BI claims or loss of revenue claims as Covid-19 was a new disease and one that they could not have foreseeable written cover into their policy for.

Impact on Cladding & Building Safety

After the Grenfell incident, cladding safety has been a primary concern for the construction industry and the government has been seen to make sure they are putting things right. There has been a program of remediation to high rise buildings, and despite the pandemic, the government has still maintained the remediation of unsafe cladding is of ‘critical importance’ still. However, during the first lockdown, inevitably worked slowed up. Things have improved, but we are still playing catch up!

What now?

Well, it’s business as usual. Yes, there is a threat of a second lockdown but not nearly as harsh as the first, so those taking out builder insurance policies would be well advise to add business interruption insurance to their policies if possible & check with your insurer if Covid-19 can be claimed under the BI Section of an insurance policy before cover is taken out.

If you are a trades person, why not talk to one of our advisors today on 0800 085 3761 for a no obligation quotation.

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Why choose the Property Insurance Centre

Independent broker with staff you can speak to by phone or online

Access to a wide range of insurers to source suitable insurance cover for your needs

Bespoke Insurance Schemes & Portfolio Policies available

We can tailor your policy to suit your exact needs to give you complete peace of mind

Competitive Premiums

Cover available for the buildings while the property is being converted, renovated or extended

Over 40 years experience working with the best insurers in the UK

Excellent communication so that you understand what risks you are insured against

Why choose the Property Insurance Centre

Independent broker with staff you can speak to by phone or online

Access to a wide range of insurers to source suitable insurance cover for your needs

Bespoke Insurance Schemes & Portfolio Policies available

We can tailor your policy to suit your exact needs to give you complete peace of mind

Competitive Premiums

Cover available for the buildings while the property is being converted, renovated or extended

Over 40 years experience working with the best insurers in the UK

Excellent communication so that you understand what risks you are insured against

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