The need to comply with contractual requirements is often a driver in a company’s insurance programme and the presence of JCT Clause. 6.5.1 in a contract represents a significant increase in a contractors liability under the contract.
What is JCT Clause 6.5.1?
The clause appears in the 2005 JCT Standard Buildings Contract or JCT Minor Works Contract and is designed to protect the employer against legal liability claims from neighbouring properties arising from works undertaken at the employer’s property by a contractor.
In the interest of clarity for non-construction professionals the “employer” is the party who is having the work undertaken and the “contractor” is the party who is carrying out the work.
If you are building or redeveloping a property and the work undertaken by a contractor causes damage to neighbouring properties due to collapse, subsidence, heave, vibration, weakening or removal of support or lowering of ground water then you will probably be legally liable for the damages.
Legal precedent for this liability upon the employer was provide in Gold v Patman & Fotheringham, 1958 where the court ruled that the adjacent properties had acquired a right of support from Gold’s property, that Gold had removed this support at his own peril. The contractor was not shown to be liable and whilst the contractor held insurance is respect of such risks the policy was not in joint names and therefore would not respond to a legal liability made claim upon Gold.
If the contractor undertaking the work has acted negligently in the execution of their duties then such damage could well be covered under the contractors public liability insurance. If the contractor has not been negligent then the liability will fall upon the employer.
JCT Clause 6.5.1 fixes this loophole on behalf of the employer and by placing contractual responsibility for non-negligent personal injury or property damage on the contractor. This creates an insurable interest with the contractor and the JCT Clause 6.5.1 insurance policy provides the cover in this area.
The policy is arranged in the joint names of the employer and the contractor. The contractor pays the premium for the policy with the indemnity under the policy being for the sole interest of the employer.
What is JCT Clause 21.2.1?
Under the JCT Standard Form of Building Contract 1998 the requirement upon the contractor is in JCT Clause 21.2.1 and has the same effect as Clause 6.5.1. Both forms of contract are still in use. The previous iteration of Clause 21.2.1 was n fact 19.2.a for the historians amongst us.
How do I arrange JCT 6.5.1 or 21.2.1 cover?
We can provide terms from a range of leading market providers and enquiries can usually be turned around in one working day, sometimes sooner. You can apply on-line or you can call us direct on 0161 300 2930 to discuss your requirements.