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All Contract Works and Liability insurance policies contain a Construction Period clause that sets out a maximum period a builder is permitted to take to complete their project; it’s typically 12 months but can be shorter.
If a project extends beyond this maximum period, then the policy may no longer provide cover for that project.
To avoid this occurring to you, members should:
Contract Works and Liability insurance policies also contain a ‘Cessation of Works’ clause. This clause states a maximum period for which a project can be “on hold”. For example, some policies will allow works to be on hold for 30 days.
If you are unable to continue working on-site (for example because of a COVID-19 site shutdown) for more than the 30 days or whatever period your policy states, then that job may no longer be covered for things like liability or material damage incidents.
To avoid this occurring, members should refer to their individual policies to determine the period of cessation of works and keep records of any activity on a site within that period even if it’s just a security check.
If in doubt contact HIA Insurance Services or your broker/insurer. For further information and guidance about what to do during a site shutdown, members should refer to the HIA Information Sheet ‘Site shutdown - dealing with clients & contracts’ and ‘Securing a residential building site and building work’.
Members are looking for ways to keep working while waiting for the necessary materials or labour to be available. Doing building work ‘out of order’ or in a way that sits at odds with industry custom and practice may keep you busy, but it could have consequences for your insurance coverage.
For example, if you install the interior before the exterior cladding the insurer may deny any contract works claim on the grounds that you did not take “Reasonable Care and Precautions”. This may jeopardise your ability to make a claim if, for example, there is rain damage to interior work when the exterior cladding is incomplete.
Before making any changes to the order of building work, members should contact HIA Insurance Services or their broker/ insurer.
HIA has developed a tool kit of resources to assist members in managing their business needs and customers. We recommend that members continue to review and utilise the Toolkit resources.
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