PropertyWorks - Commercial Building Works (ROI)

Our PropertyWorks product has been designed to give the type of cover you would expect from a standard commercial insurance policy but which also extends to include the contractual obligations of the property owner.

• Designed to fit the requirements of standard RIAI contracts,
• Cover for the contract works, the existing property and the contents under one policy,
• The facility for the policy to be written in the joint names of the property owner and the contractor if required by the contract,
• One policy excess applies to all damage losses combined.
• Your client remains in control of the insurance arrangements,
• Liability cover for the property owner while the work is being carried out,
• Wide policy wording where cover is usually provided on an ‘All Risks’ basis including theft, malicious damage and accidental damage.
• PropertyWorks is available for risks situated in the ROI

Key aspects of the cover

• We can insure existing structures in joint names for "All Risks".
• We can insure the contract works, also in joint names, on the same basis as the existing structure.
• We can insure the contents against all the standard contents insurance perils.
• We can insure the property owners liability risk where a contingent exposure arises from the acts of the contractor.
• We normally give "all risks" coverage within the scope of a broad wording, nominal excesses and a very limited number of policy restrictions.
• We normally encourage clients to use PropertyWorks irrespective of the joint names clause. This gives the client;
  • Coverage for both the existing structure, the works and materials on a first party basis
  • A consistent basis of settlement
  • Only one insurer and one loss adjuster applies
  • Only one excess
  • Removal of grey areas as to what is existing structure and what is works or materials at the time of loss
  • Only one point of contact to resolve the claim
  • Option to extend coverage to insure "non negligence" type exposures

Key Exclusions

What restrictions in cover should I expect under a PropertyWorks policy?

There are a few key exclusions you can expect:

• The usual market exclusions such as war, chemical, biological & nuclear attack and sonic boom exclusions.
• Risk management limitations surrounding the application of heat, retaining weather proofness, security conditions and unoccupancy conditions.
• Property taken into use or substantially completed.

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Please note that this summary is not intended as a full list of our policy conditions and exclusions. For full terms, conditions, exclusions and limitations please refer to our policy summary and policy wording, available at the Document Centre.

The Existing Structure

Why PropertyWorks? When notifying their current property insurer of a significant renovation, particularly where insurance cover is prescribed by contract, property owners can frequently find themselves faced with numerous difficulties.

Property insurers are often unable to accept the risk of insuring what is effectively a building site with all the inherent risks they bring:

• Removal of doors, windows and roofs,
• Delivery of plant and machinery,
• An increased number of individuals with access to the property,
• The application of heat during the works,
• Debris

Depending on the circumstances, some insurers will look to stop covering the property and come off risk.

Alternatively, an insurer may provide some cover on the existing property but this is usually on a vastly reduced and highly restricted basis. This then puts the property owner at risk of being in breach of any contractual obligations that may apply to the contract.

The Contract Works

This means the property owners is reliant on the contractor's insurance to provide adequate cover. Commercial insurers will not normally cover the contract works, preferring to leave that to the contractor. This means the property owner is reliant on the contractor's insurance to provide adequate cover.

This potentially leaves the opportunity for there to be both:

• Gaps in the cover - for example, the contractor may fail to arrange adequate insurance or breach their policy conditions.
• Grey areas in the event of a claim with two sets of insurers (and possibly loss adjustors) to negotiate as to what is contract works and what is part of the original structure. 

At the very least, your client loses control over a key aspect of cover that they need to rely on to protect their interests in the event of a claim.

Joint Names Insurance

Where the work being undertaken is of a more substantial nature, the property owner is likely to employ a professional team to oversee the project.

Architects in particular tend to work with “off the shelf” RIAI contracts, as these provide a good template to deal with all aspects of the operation of the works and the relationship between the builder and the property owner.

Within the RIAI contract, the property owner may be contractually obliged to insure in joint names with the contractor, both the existing structure and the works against loss or damage by specified perils.

By agreeing to insure in joint names the property owners existing insurer loses the right to pursue the contractor and recover any costs they may have to pay out in the event of a claim, even if they have been negligent.

Insurers can be extremely reluctant to maintain insurance which is in joint names and could seek to reduce their exposure by limiting the extent of cover. This means meaning the property owner might then be in breach of their contractual obligations as stated within the RIAI contract. 

Liability Exposures

This concerns the liability of the property owner in respect of others to compensate them for injury or damage to their property whilst the works are ongoing.

A property owner may think that if a builder he hires injures a visitor, that builders insurance will pay. This belief has some merit but a visitor will see the owner as the creator of the risk, even if someone is working on his behalf.

There are also other concerns that come with relying on another party’s insurance to provide adequate cover. For instance, the property owner should ensure that the contractors’ insurance is adequate, is still in force (has been renewed) and that they are not committing acts that are in breach of their policy conditions.

Another important aspect to consider is the extent of liability cover required under an RIAI contract. The standard RIAI wording states that the contractor is only liable for their own negligence and not the negligence of the property owner.

It is therefore very important to protect the owner from potential gaps in the cover from arising. 

 

The Existing Structure

By this we mean the buildings of the property including out buildings, garages, walls etc. if cover is required.

Under this policy, cover is written on an indemnity basis. Not new for old. The cover provided will ensure that the existing property will be restored to the condition it was in prior to any loss (providing it has been insured for the correct value.

The breadth of cover provided will however vary dependent on the construction of the property and its condition. For example, if a property is used every day and is in a sound condition, we should be able to provide "All Risks"* cover. If the property is in a dilapidated state and unoccupied, then the perils operating would probably need to be restricted in some form.

If contract conditions require insurance for specifically named risks, then we can usually accommodate this to match in with contract obligations.

The policy also provides cover for the cost of renting alternative accommodation if incurred whilst the property is being repaired following an insured claim rendering it uninhabitable.

(*Under any "All Risks" policy, there will be certain exclusions that apply e.g. A standard "All Risks" buildings policy would exclude storm damage to gates and fences.)

Contract Works (Materials)

This item covers the materials and fixtures and fittings used in the works carried out at the property against "All Risks"* of physical loss or damage.

The sum insured should be the full contract value inclusive of VAT.

We would usually cover, as standard, up to €5,000 value of loose contract materials on site at any one time, (subject to being satisfied with site security).

Contents

By this we mean standard contents within the property, which are the property owner's possessions or which they are legally liable for.

If cover is selected, the contents are insured against:

• Fire, lightning, explosion or earthquake
• Aircraft and other flying devices or items dropped from them
• Storm, flood or weight of snow
• Escape of water from fixed water tanks, apparatus or pipes
• Escape of oil from a domestic fixed oil-fired heating installation and smoke damage caused by a fault in any fixed domestic heating installation
• Theft or attempted theft
• Collision by vehicle or animal
• Persons taking part in riot, violent disorder, strike, labour disturbance, civil commotion or acting maliciously
• Damage to contents caused by subsidence or heave of the site on which the risk address stands or landslip
• Falling trees, telegraph poles or lamp-posts

Liability to Third Parties

Our PropetyWorks policy gives an automatic cover of up to €2,000,000 in respect of your client's legal liability to others to compensate them for injury or damage to their property, arising out of their capacity as property owner during the period of insurance.

NB. Please note that there is no cover for contractors' or employers' liability.

For full terms, conditions, exclusions and limitations please refer to our policy summary and policy wording, available at the Document Centre.

Seamless Cover

We provide your client with a consistent basis of settlement because a single insurer underwrites the entire policy, under a single policy wording.

This means your client will avoid any potential “grey areas” in the event of claim and disputes that could arise with the client’s property insurer covering the existing structure and the contractor’s insurer covering the contract works. Each insurer would have their own policy wording and cover different perils, with different limits and exclusions. This could result in possible gaps or overlaps in the cover resulting in potential problems for your client when trying to resolve a claim.

In addition to that, each insurer is likely to appoint their own loss adjustor to work on their behalf, each trying to protect the position of their respective client.

Please note that claims are paid on an indemnity basis and not new for old.

Helping Your Client

Helping your client to safeguard their property and reduce their liability exposures.

During the course of works at their property, your client will be exposing this valuable and important asset to increased risk. Regardless of whether your client chooses to buy insurance to protect themselves (and of course, we strongly recommend that they do), it is still important that they consider ways of protecting their property and exposures resulting from injury or damage to a third party.

We have therefore compiled the following information which your client may find useful to remind them of the issues they need to evaluate when their property is undergoing works.

Fire

What is the risk? During works, the exposure to fire is greatly increased due to electrical work, welding work, use of paint removal torches etc. Should fire occur, it has the potential to cause severe damage to property (which could put the project back months) and endanger life.

Steps that can help prevent a fire at the property:

• Ensure that electrical wiring and appliances are worked on and checked by an adequately qualified electrician.
• Consider whether there is adequate fire protection at the home e.g. smoke alarms, fire extinguishers, etc.
• Consider banning smoking in or near the home.
• Seek advice from the local fire protection officer and consider the use of temporary sprinkler systems, etc, especially if the home is large.
• Any areas where work has been carried out involving heat should be checked thoroughly and the area not left unattended within an hour of the use of heat.
• Rubbish and debris created in the process of the works should be kept a suitable distance away from the building and especially if being destroyed by bonfire. It should be removed regularly.

Theft and Vandalism

What is the risk? Always ensure that the property and its contents are adequately protected from intruders. However, during the course of works, with workmen perhaps going in and out of the premises, doors and windows may be left open and unattended. Scaffolding may make access to the upper parts of the building easier.

Steps that can help prevent a theft from the property:

• Consider whether additional security will be required during the works to cater for this increased accessibility.
• If asking a contractor to secure the premises at the end of a day's work, ensure that they are aware of all the security measures that should be put in place.
• Works materials should be secured rather than left out in the open and especially overnight.
• If a property is unoccupied, particularly in a remote location, it is more susceptible to intruders. Additional security measures should be considered and proper supervision of the home/site should be carried out.

Water Damage

By this we mean the exposure to wet weather or storm damage and the damage that can be caused by faulty water apparatus such as pipes or gutters.

Steps that can help prevent damage to the property from water:

• Ensure that your property is weatherproof, especially at the end of a day's work. This is especially important of course when roof works are carried out or external walls knocked down or basements exposed.
• Gutters and waste pipes should be kept clear of any rubbish.
• Consider installing leak sensors or trays on pipes.
• If the property is going to be left unattended for any length of time we suggest that the water supply is turned off, especially if there has been any work on water pipes.
• During the winter, ensure that either the water is turned off when the property is unoccupied or that the central heating system is operational to a minimum set temperature to prevent water freezing in pipes and causing them to burst.

Safety

The safety of your client, the contractors and the public is paramount. The very nature of certain works exposes everybody to an increased risk of injury.

If using a professional architect or contractor to manage a project the client should ensure that they are adequately qualified and that they have adopted Health and Safety procedures on site.

What is the Risk?

Whilst certain contract conditions between the client and the contractor may mean that they are responsible for insuring certain aspects of cover in joint names, (meaning that the client or their insurer cannot pursue a negligent contractor causing loss from a contract specified cause), there may be circumstances where the client or their insurer are able to pursue a recovery from a contractor.

Steps that can limit exposure to liability issues should they arise:

• Your client should check that any contractor working for them has adequate Public Liability insurance.
• Gutters and waste pipes should be kept clear of any rubbish.
• Contractors would normally have cover, somewhere between a limit of €1,000,000 to €5,000,000 in the Republic of Ireland.
• It would be wise to ensure that their cover limit would be enough to reimburse the client should they be responsible for causing a total loss at the property e.g. if the clients house is worth €2,000,000, it would be sensible to insist that the contractor has Public Liability cover in force for at least that amount.

Non Negligence Insurance

We are able to provide quotations for non negligence insurance.

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(Please note that special conditions could apply to the PropertyWorks insurance we arrange for your client. In the event that cover is agreed, clients should refer to their policy schedule and wording for the specific details of the cover applicable to them).