Dis­cussing in­sur­ance is es­sen­tial

Pilbara News - - Property - Dianne Gil­le­land

builder to ar­range the con­struc­tion in­sur­ance to cover any dam­age to the ac­tual works in progress un­der con­tract and pub­lic liability in­sur­ance to cover prop­erty loss or per­sonal in­jury suf­fered by a third party.

The owner usu­ally com­mits to ar­range in­sur­ance for the ex­ist­ing prop­erty and contents.

If the con­tract is silent on which party is re­spon­si­ble for in­sur­ing the ex­ist­ing prop­erty, then it will con­tinue to be the prop­erty owner’s re­spon­si­bil­ity as it was prior to the con­tract be­ing en­tered into.

It seems rel­a­tively sim­ple; how­ever, there are crit­i­cal is­sues that need to be ad­dressed to avoid con­fu­sion, dis­putes and unin­sured losses.

First, it’s com­mon for both builders and own­ers to as­sume that the builder’s pub­lic liability pol­icy will cover the own­ers’ ex­ist­ing prop­erty if it is dam­aged dur­ing the project.

But the builders’ pub­lic liability pol­icy re­sponds to in­jury or dam­age to third-party prop­erty when the builder is le­gally li­able for the dam­age — usu­ally for neg­li­gence.

Sim­ply be­cause the builder is per­form­ing works on the site does not au­to­mat­i­cally mean the builder is re­spon­si­ble for all oc­cur­rences of dam­age that may oc­cur to the ex­ist­ing prop­erty.

Think of the sit­u­a­tion where storm wa­ter en­ters a prop­erty dur­ing an ex­ten­sion to the ex­ist­ing build­ing caus­ing dam­age to the ex­ist­ing prop­erty and contents.

What if the wa­ter en­tered through a dif­fer­ent part of the build­ing, the op­po­site end of the prop­erty to the ex­ten­sion works?

What if the builder has taken all rea­son­able care to pro­tect the prop­erty en­sur­ing gen­er­ous roof cov­er­age by tar­pau­lins, cor­rect ties, ad­e­quate over­lap­ping, tar­pau­lins in ex­cel­lent con­di­tion, am­ple weights used and ap­pro­pri­ate con­sid­er­a­tion given to the fore­see­able weather?

What if the builder is not le­gally li­able for the dam­age?

How would a court of law view this?

The an­swers to th­ese ques­tions are un­cer­tain and rely on an in­ter­pre­ta­tion of law.

You can be sure that if the builder’s pub­lic liability in­surer be­lieves their client is not li­able they will de­cline the claim and de­fend any claim the owner brings against the builder.

Sec­ond, many gen­eral home and contents poli­cies will con­tain a clause that ex­cludes all cover if al­ter­ations or ad­di­tions are per­formed on the home over a cer­tain value.

This value may be $15,000, it may be $30,000, or it may be $0.

Nev­er­the­less, it is crit­i­cal that you as the owner check the pol­icy word­ing or con­tact your in­surer to en­sure the cover you have in place will re­spond if al­ter­ations or ad­di­tions are be­ing un­der­taken.

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