Are you taking over a partially complete project?

With the current challenges facing the construction sector, more and more builders may be taking over partially complete projects. If you are looking to complete an existing incomplete project, there are a few extra steps you will need to take to ensure your insurance cover continues to protect your projects. If you do not take these additional steps, your project may not be covered if something does go wrong. Here’s what you need to do before working on a partially complete project:

1. 1. Contract Works (also known as Construction Works) and Public & Product Liability Insurance (CAR)

   Before you take over completing an incomplete project, it is important to contact your Contract Works and Public & Product Liability insurance broker, as it is likely the insurer will need to provide approval for you to undertake work to a partially completed job. The type of information that the insurer will need includes:

   • A cost breakdown of the works completed by the previous builder and the cost breakdown of the works to be completed under your contract.
   • A dilapidation report (from an independent building certifier) with respect to the partially completed works.
   • Photos of the works completed to date.
   • Confirmation of no known claims or instances which could give rise to a claim on a site.

   If you are required to effect Material Damage cover for the partially completed building, you will also need to request Existing Structure cover covering the existing building. There will, again, likely be an approval process and, if existing structure cover is approved, there may be a premium payable for this cover.
   
   Bear in mind, while your Contract Works insurance will help cover you for damage to the new works during the course of construction, it won’t cover damage caused to the existing property, unless caused by your proven negligence. As a result, your client may be out of pocket for any damage caused to the existing property during the course of the project.

2. 2. Building Indemnity Insurance (BII) / Home Owner Warranty Insurance

   Before working on a partially complete project, you may also be required to take out your own Home Owner Warranty Insurance for the remaining works (where the size of the contract and the nature of the building you are to complete trigger the requirement to take out a policy). Even if the existing works had a Home Owner Warranty policy, you will still be required to take out a separate policy for the portion of work you will be completing.
   
   As such, you will need to ensure you have the appropriate facility limit to do the value of the works you are contracting to undertake.
   
   You will likely also require the approval of the insurer to take out this policy. The information required by the insurer will likely include the following and is required so that the insurer can clearly distinguish between the works being completed by the original builder and the works to be completed by you:

   • Full details of the previous BII or Home Owner Warranty policy.
   • A BII or Home Owner Warranty application form.
   • A copy of the new building contract.
   • A full and detailed defects inspection report.
   • A detailed scope of works, including your quote to the homeowner.
   • A copy of the original Development Approval and any stage approval compliance certificates.

It’s not the easiest time to be in construction, and although the sector is expected to eventually recover, it is important to stay diligent about your insurance, and ensure it continues to provide you with appropriate protection as your circumstances change. In the current environment, being left with gaps in cover and ending up with out of pocket expenses would be less than ideal for any builder. Staying in touch with your broker regularly can help ensure you’re kept up to date with the latest updates and resulting insurance implications.