Building works insurance cover - are you protected?

Building works insurance cover - are you protected?

Is your school, academy or multi-academy trust planning on undergoing a transformation?

Be it a small classroom refurbishment or a full-blown new build, having the right insurance in place to cover building works is essential, yet many members are falling short of this requirement and leaving themselves at great risk.

Whilst the building contractors are responsible for the management of the works and any related risks, the school itself bears the responsibility for arranging the insurance cover required for the works and any existing buildings, as set out in the contract terms and conditions. Many members are unaware that the Risk Protection Arrangement only includes protection for building works up to a contract value limit of £250,000 for each claim. Any contract above that value must be insured separately and in full. As a result, insurance requirements are either overlooked or they become a last-minute decision, often sought at a time where internal colleagues are on annual leave during the school holidays, when building works are most likely to take place.

Crucially, it is also worth noting the Risk Protection Arrangement cover does not include Joint Names Insurance, again as set out in the contract terms and conditions, regardless of the value of the contract works.

Managing risk in a high-risk industry

The construction industry is high-risk in many ways, from fires and injuries on site to insolvency of contractors and subsequent delays in completion. The impact of these issues materialising cannot be underestimated. So, how can you manage the risk?

Plan ahead. Engage the insurance suppliers in the planning stage to ensure the cover is in place for when the project starts, rather than it becoming an afterthought that leaves you at risk at the beginning of the project.

Check the contract terms and conditions. It is very important that you understand the insurance responsibilities that are included in the contract terms and conditions (usually in clauses 5.4a, 5.4b or 5.4c of the JCT Minor Works contract, but you should double check if you are using an alternative contract). If responsibilities are not clear, ask for confirmation from the contractor or your planning adviser.

Purchase the right cover. You may already have insurance policies in place, either through the Risk Protection Arrangement or independent insurance cover, but this doesn’t mean it is enough to cover the complexities of your building works. Be sure to double-check the small print and look to put extra cover in place where current agreements are not sufficient. For example, insurers providing the additional contract works cover cannot provide temporary insurance cover for any existing building, when they do not insure that building on an annual basis.

Understand responsibility. Whilst the building contractors have a responsibility for safety, the payment of the insurance is usually the members' job. Do not presume this is a given within the contract with the contractor, especially when utilising the JCT Minor Works contract. If you’re unsure, ask.

Route to market. CPC’s Insurance and Associated Services procurement framework, specifically Lot 3, provides five suppliers offering comprehensive cover for all your contract works insurance needs:

• Aon UK Ltd.

• Arthur J. Gallagher

• Howden Group Holdings Ltd.

• Miller Insurance Services LLP

• Zurich Insurance LPC

CPC works in partnership with Risk2Value on this agreement and they provide specialist advice. Risk2Value is authorised and regulated by the Financial Conduct Authority (FCA No. 313262). The framework also offers an alternative to the Risk Protection Arrangement offering via Lot 2: Academies and Schools Comprehensive Insurance Cover and Service Provision.

Purchase with confidence. This framework (Lot 3) is approved by the Department for Education. The DfE review and assess any requests for frameworks to be recommended and are entirely impartial in doing so, based on the assessment of four elements:

• Compliance with procurement regulations

• Ease of use

• Suitability

• Value for money

This request is taken to the Get Help Buying for Schools (GHBS) Commercial Assurance Board, consisting of members of the GHBS Senior Leadership Team, who review the application and decide whether it will be recommended on the DfE's website.

This thorough process allows you to purchase with confidence and clarity.

For more information on CPC's Insurance and Associated Services framework, visit the dedicated page of our website, or read on for the current selection of DfE recommended frameworks in our catalogue.