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Chris Bell

Property renovation insurance for businesses

The most common form of construction contract used in the UK is published by the Joint Contracts Tribunal (JCT) and is available in a number of variations. The JCT Standard Building Contract may be the most appropriate form of contract for any business looking to renovate or refurbish its premises.

In a discussion piece about building contracts, the magazine Homebuilding & Renovating suggests that disputes over construction contracts typically revolve around:

  • what exactly do the renovation works include;
  • how much are the building works going to cost;
  • when is the works scheduled for completion; and
  • what course of action needs to be taken if changes are made to the proposed works.

Although the discussion focuses on the issues as they affect homeowners, these are also the problems encountered in any renovation projects for commercial premises. The JCT anticipates just such problems and provides clearly expressed procedures for resolving disagreements and disputes.

The JCT and renovation insurance

The JCT Standard Building Contract for renovation works makes clear that not only is construction insurance cover needed for both the existing structure of the building and the intended building works, but that it should also be the joint names of both the client and the contractor.

In other words, it is not possible to rely on any insurance policy arranged by the contractor alone – this is unlikely to provide the safeguards you need and may leave you with significant unresolved problems.

The amount of cover you arrange of course depends on the scale of the proposed renovation works and the value of the existing business property. There are likely to be simple yet comprehensive construction insurance plans, specifically designed for renovation works, which provide complete packages of cover for contract values of up to £500,000*.

Just like the JCT Building Contract itself, these may be tailored to suit whatever clauses are included in your particular contract of works.

The typical construction insurance policy is likely to provide cover against:

  • loss or damage to the existing structure and fabric of the building and its contents – sometimes called non-negligent liability insurance, to which section 6.5.1 of the JCT Standard Building Contract refers (and described in more detail by Designing Buildings;
  • loss or damage to the contracted renovation works;
  • public liability claims – which might arise if any visitor to the building site, its neighbours or members of the public are injured or have their property damaged;
  • the theft, loss or damage of handtools kept on the site; and


  • the theft, loss or damage of any construction machinery you own or have hired in.

During the course of your proposed renovation works, your business premises are likely to stand empty and unoccupied. A vacant building is usually more vulnerable to a variety of risks. These come not just from squatters, vandals or even arsonists, but also the possibility of otherwise relatively minor repair and maintenance tasks (such as a dripping tap) becoming major emergencies if there is no one there to take immediate action (to prevent a flood, for example).

Your construction insurance package may therefore also need to include unoccupied or empty property insurance for the duration of the building works.