Possible solutions for you to consider:
The following is an extract from ‘Insurance under the Minor Works Building Contract 2016’. This extract outlines possible solutions where clause 5.4C is to operate i.e. those circumstances where clauses 5.4A and 5.4B are not appropriate. The full text is available at https://corporate.jctltd.co.uk/insurance-under-the-minor-works-buildingcontract-2016/.
Clause 5.4C is to apply where clause 5.4A does not apply and clause 5.4B cannot apply because the relevant insurance is not available. As a consequence one has to make other arrangements and which clause 5.4C requires to be set out in documents to be specifically stated in the relevant Contract Particular. Those arrangements are dependent upon the circumstances and market factors at the time but there are three principal ways that one might proceed.
Clause 5.4C particulars – Possible Solution 1
Works and existing structures: See if the proposed contractor’s insurers would be prepared to provide Joint Names cover under a Works policy for both the Works itself and the existing structures. If this is acceptable to the insurers the wording of clause 5.4C Contract Particulars would simply reflect such arrangement as a requirement e.g. The contractor shall effect and maintain a Joint Names Policy for All Risks Insurance for the full reinstatement value of the Works (plus the percentage, if any, stated in the Contract Particulars to cover professional fees) and for the existing structures together with the contents of them owned by the Employer or for which he is responsible, for the full cost of reinstatement, repair or replacement of loss or damage. The actual wording will depend on whatever arrangements are available.
Clause 5.4C particulars – Possible Solution 2
Works: For the contractor to insure the Works for All Risks Insurance in the Joint Names of the Contractor and Employer; in those circumstances clause 5.4C particulars (in part) would then state that the wording of clause 5.4A is to apply.
Existing structures: The above would then leave the question of existing structures which generally the Employer would have already insured or have insured by its landlord (where relevant) on its behalf. Where the Employer already has insurance in place it must notify his insurer that building works are to be carried out and also ensure that appropriate cover is maintained. Where the Employer has a landlord it should always notify the landlord of any proposed building works and involve the landlord prior to making any other arrangements for insurance so as to avoid duplication of insurance and increasing costs. Where the Employer has not taken out insurance for existing structures it should do so.
Clause 5.4C particulars should then in addition set out the position regarding insurance of the existing structures and where necessary require the Employer to insure in its own name. The level of cover is for the Employer to agree with the insurer. In this situation, the Contractor not being a joint named insured would receive no cover under the Employer’s policy for existing structures. The Contractor would cover its liability for any damage to those existing structures under its public liability cover required under clause 5.3.2 or by an extension of such policy.
Clause 5.4C particulars – Possible Solution 3
Works: The Employer may decide to insure the Works for All Risks Insurance in the Joint Names of the Employer and Contractor; clause 5.4C particulars could state that the Employer shall effect and maintain insurance as set out in clause 5.4B.2.
Existing structures: The existing structures part of Possible Solution 2 above is equally relevant to this situation.