It is generally the responsibility of the owner, but that doesn’t mean that their insurer won’t come after you if they believe you have some responsibility.
In practice, it is often not addressed at all, which leads to an awkward conversation, even if you’re not responsible, as unless the property owner has organised cover from their insurer, in the absence of insurance monies to pay for the repairs, it could leave the project in limbo.
As much of the work associated with the design of a project is carried out by outside consultants, many builders think that the consultant’s professional indemnity policy will get them out of trouble.
The position is that you’re first in line, as far as the client is concerned… do you have your own cover, or are you relying on the consultant’s insurance to get you out of trouble?
In many instances, it’s simply not possible to obtain the insurance cover to satisfy your liability under a hire agreement. We try to minimise as many gaps as we can.
On larger projects, many builders sign contracts supplied by their client without adequately assessing the risks they have taken on.
The insurance clauses of the contract are important, but what is more important is to protect the exposures picked up by the indemnity, which in many instances goes way beyond what is possible to insure and will leave you exposed.
On larger projects, bank guarantees become problematic, as they generally involve the provision of security to the bank, in the form of bricks and mortar, which ties up capital.
Surety bonds are a good alternative at a similar cost, without the security issue.
