The number of homeowners (Employers) planning or carrying out renovation works on their property is high as they look to improve, create more space, add value etc. However, this work does not come without its perils and is fraught with potential danger. 
We look at the benefits of using a JCT Contract and taking out a Joint Names insurance policy that will help those planning avoid some of the common pitfalls. 
What is a JCT Contract? 
'JCT' is short for ‘Joint Contracts Tribunal’, which continues to produce a standard set of up dated contractual documents and guidelines for the construction industry. A JCT contract provides all parties to a construction project with a clear understanding of the project specification and includes everyones roles, responsiblities, obligations and costs. 
What is a Joint Names insurance policy? 
A Joint Names insurance policy covers the Existing Structure (ES) and Contract Works (CW) on reinstatement value for the duration of the works. It is in the joint names of the Employer and any named Contractor(s), but always taken out and paid for by the Employer. 
It provides ‘All Risks’ cover on both the ES and CW, compared to more restrictive ‘Specified Perils’ cover only when insuring the ES in isolation. The other issue of insuring the ES and CW independently, is there are likely two different insurers involved in the same claim, each providing different covers and insuring different parties. 
Key Benefits to the Employer 
Entitled to the full proceeds of any claim, which he or she would not be if they relied on the Contractor to cover the Contract Works. 
Full control of the policy with the ability to make any changes mid-term if required - in the event of a dispute, the Employer is able to amend the policy midway should they fall out with their Contractor or they go into administration etc. 
Reduces the risk of the Contractors All Risks insurance policy not reacting as anticipated (breach of warranty, non-payment, non-disclosure, cancelled mid-term unknowingly, etc). In the event the Contractor’s insurers decline to pay, the Employer is required to prove negligence on the part of the Contractor and then relying on the balance sheet of the Contractor being enough to meet the claim amount plus costs. N.b. Most contractors don’t carry big reserves and end up in liquidation. 
Provides protection against Contractor insolvency or problems when making a claim for disputed amounts – it is difficult to arrange cover mid-way through a project and claims payments that are made to a Contractor in liquidation will more than likely go towards paying off other creditors on any outstanding loans etc, before you. 
Provides ‘All Risks’ cover on both the Existing Structure and Contract Works. Typically, you can expect to find a Specified Perils policy on the Existing Structure only. 
Reduces the risk of further delays in the event of a loss when two insurers are involved disputing liability. 
Joint Names insurance policy will typically have a ‘non-vitiation’ clause, meaning that both insurable parties to the contract, the Employer and the Contractor, are assessed separately for any breaches in policy conditions. Given that a breach in policy conditions is only ever made by the party performing the works (the Contractor), the Employer will still be entitled to make a claim even if the Contractor is not. 
We recommend anyone planning on undertaking extensive works should consider using a JCT Contract and taking out a Joint Names insurance policy. 
It is important to pay close attention to the terms of the JCT Contract as any lack of clarity or detail will potentially lead to disappointment later down the line if too much discrepancy is left to the contractor. 
Consequently, we recommend taking advise from an experienced industry professional who is closely associated to the project, like your architect who can advise accordingly. 
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