Signing a JCT contract is usually seen as a positive step. The project is agreed, the price has been negotiated and work can finally be scheduled. But the insurance wording deserves just as much attention as the scope of works.
The problem I see in practice is not always that a contractor has no insurance. More often, they have a policy that looks suitable but does not respond in the way the contract requires. The result can be a breach of contract, a disputed claim, an unexpected excess or a serious funding gap when something goes wrong.
That is why the key question is not simply, “Whose policy is it?” The more important question is, “Does the policy actually provide the cover required by the JCT contract?”
Recent JCT insurance guidance from Paterson Insurance Brokers and Allianz’s refreshed construction capability for cross-border EEA work have both brought contract alignment back into focus. For contractors taking on work in Essex, Kent, London or elsewhere in the UK, these are the five checks I recommend completing before signing.
1. Confirm who insures the works
The first check is responsibility. The contract particulars and insurance schedule should make clear whether the contractor or employer arranges the contract works insurance.
In the schedule, you may see DE3 used to indicate that the contractor arranges the contract works insurance, while DE4 may indicate that the employer arranges it. However, the terminology and clause numbering can vary between JCT forms, so do not rely on the abbreviation alone. Read the full insurance option and confirm the arrangement with your broker and solicitor.
The wider JCT structure is generally understood as follows:
- Option A: commonly used for new builds, with the contractor arranging Joint Names All Risks insurance for the works.
- Option B: also associated with new builds, but with the employer arranging the works insurance.
- Option C: commonly used for alterations, extensions and work to existing structures, with the employer arranging cover for the existing structure and the new works in Joint Names.
This distinction matters because a contractor may price a project believing the employer is insuring the works, while the signed contract places the responsibility on the contractor. If the contractor then relies on an annual policy that does not meet the JCT requirements, the project may start without compliant protection.
For a new build under Option A, the contract works policy will typically need to cover the project on a Joint Names All Risks basis. For refurbishment or extension work under Option C, the employer may be responsible for insuring both the existing building and the new works.
Do not assume that an existing commercial or household buildings policy automatically continues once major works begin. The construction activity must usually be declared and accepted by the property insurer.
2. Check that “Joint Names” really means Joint Names
A frequent misunderstanding is the difference between a party being named as an insured and having its interest merely noted on a policy.
A JCT contract may require the employer and contractor to be insured in Joint Names. This normally gives both parties direct rights under the policy and helps prevent the insurer from pursuing one insured party to recover a claim payment made to the other. That recovery process is known as subrogation.
By contrast, a policy that only says “principal’s interest noted” may not give the contractor the same protection. The employer may be recognised as having an interest in the project, but that does not necessarily make them a full insured party with the rights required by the contract.
This is one of those details that can look satisfactory on a certificate but fail when the policy wording is examined closely.
Before signing, ask your broker to obtain written confirmation of:
- The exact names shown on the policy.
- Whether both parties are insured in Joint Names.
- Whether a waiver of subrogation applies.
- Whether the policy includes any non-vitiation wording.
- Whether the arrangement applies to the full period required by the contract.
The correct endorsements may need to be negotiated with the insurer. A standard certificate of insurance is not always enough evidence that the JCT obligation has been met.
3. Do not overlook existing structures
Existing structures create a different risk from a new building. The contract price may be ÂŁ500,000, but the building being altered could be worth several million pounds. If the existing structure is not insured correctly, the financial exposure can be far greater than the value of the works themselves.
This is especially important under Option C arrangements. The employer’s property policy may be intended to insure the existing building and the new works, but only if the works have been declared and the insurer has endorsed the policy.
A standard buildings policy may restrict or exclude:
- Structural alterations.
- Underpinning and excavation.
- Basement construction.
- Major roof works.
- Work involving heat or temporary openings.
- Damage caused by contractors.
- Unoccupied or partially occupied premises.
Contractors should ask for evidence that the employer’s insurer has accepted the project. It is not enough to hear that “the building is already insured”. The insurer needs to know what is happening, when it will happen and how the work affects the existing structure.
Contract works policies can also restrict cover for existing structures. Some policies cover only the new works, while others may offer existing structures cover subject to a separate declared value, survey information and specific conditions.
This is where a broker’s individual approach is valuable. The correct question is not simply whether there is a policy in place, but whether the policy reflects the building, the work and the contract.
4. Treat JCT Clause 6.5.1 cover as a separate workstream
Public liability insurance is not the same as JCT Clause 6.5.1 non-negligence insurance.
Public liability generally responds where the contractor is legally liable for injury or property damage, often because negligence has been established. Clause 6.5.1 cover is intended to address certain damage to neighbouring property even where negligence cannot be proved.
The risks can include damage arising from:
- Underpinning.
- Piling.
- Excavation.
- Vibration.
- Subsidence or heave.
- Weakening or removal of support.
- Lowering of groundwater.
- Collapse or other specified structural effects.
For example, a neighbouring building could develop serious cracking after piling works, even though the contractor followed the method statement and acted with reasonable care. Public liability may not respond if there is no negligence. The JCT non-negligence insurance is designed for that different exposure.
This cover is frequently unavailable for higher-risk projects or is offered only with strict conditions, sub-limits and significant excesses. It may also exclude damage to the contract works themselves, which is another reason not to treat it as a replacement for contract works insurance.
The cover may be arranged as a separate policy or as an extension, depending on the insurer and project. The contract may also require it to be in Joint Names and may specify a minimum limit.
Do not leave this discussion until the week before work starts. Insurers may require site information, structural details, neighbouring property surveys and method statements before terms can be considered. If the project involves piling, basement excavation or work close to older buildings, the insurance conversation should begin during contract negotiation.
5. Align sums insured, exclusions and the policy period
Even when the right type of policy has been arranged, the limits and conditions may still be wrong.
For contract works, the sum insured should generally reflect the full reinstatement value rather than simply the contract price. It may need to include:
- Materials and labour.
- Professional fees.
- Debris removal.
- Inflation during the construction period.
- Additional costs associated with rebuilding.
- The value of temporary works where relevant.
For existing structures, the declared value should reflect the cost of rebuilding the building, not its market value. Underinsurance at this stage can create a major problem after a fire, flood or structural loss.
Check the liability limits as well. JCT contracts commonly require public liability of ÂŁ5 million or ÂŁ10 million, but the amount in your policy must match the contract. If the contractor has design responsibility, professional indemnity insurance may also be required, sometimes for six or twelve years after completion.
The exclusions deserve equal attention. Ask specifically about:
- Defective workmanship.
- Defective design.
- Wear and tear.
- Gradual deterioration.
- Pollution.
- Flood.
- Ground conditions.
- Damage to the defective part itself.
- Damage to existing structures.
- High-risk postcodes or known subsidence areas.
The policy period must also run from the required commencement date through the construction period and any maintenance or defects period specified in the contract. A policy that expires at practical completion may not satisfy the full contractual obligation.
Why contract alignment matters more than the policy label
Terms such as “contractors all risks”, “general contractor liability insurance” and “construction insurance” are useful starting points, but they do not prove that the cover is suitable for a particular JCT contract.
Two contractors can hold policies with similar names but very different endorsements, exclusions and limits. One may be able to add an employer in Joint Names, while another may only note their interest. One may provide Clause 6.5.1 cover, while another excludes the relevant risks completely.
That is why we recommend sending the insurance schedule to your broker before signing the contract. At Moyak Insurance Services, we take time to understand how the business actually operates, what work is being carried out and which party has accepted each risk.
As an independent general contractor insurance broker, we work with leading master brokers and insurers to help businesses secure suitable cover for their projects and budgets. We can also review wider commercial combined insurance where your business needs property, liability, business interruption and related protection alongside construction cover.
For contractors and developers across Essex, Kent and London, our role is not just to provide a certificate. It is to identify where the contract and policy do not match, explain the practical consequences and help obtain the endorsements needed before work begins.
Final checklist before signing
Before signing a JCT contract, confirm:
- The exact insurance option and responsible party.
- Whether the works must be insured in Joint Names.
- Whether existing structures are included and properly declared.
- Whether Clause 6.5.1 non-negligence cover is required.
- The required limits, sums insured, excesses and policy period.
- Any design, defective work, flood, pollution or ground condition exclusions.
- That the policy evidence matches the contract particulars.
The biggest cause of insurance disputes is often not whose policy it is. It is the gap between what the contract requires and what the policy actually provides.
Bring your broker into the conversation before the JCT contract is signed, not after a loss has exposed the mismatch. If you are arranging Construction Contractor Insurance or reviewing business insurance in Essex, Kent or London, contact Moyak Insurance Services for a practical, individual review built around your project and your business.
This article is for general information and does not replace advice on the specific JCT form, contract particulars or insurance policy wording. The relevant contract and policy should be reviewed by your solicitor and insurance broker before signing.