The North West is enjoying a period of regeneration, with a number of iconic buildings being brought back to life, but are current insurance policies complicating the process, asks Carrie Arnold of Bridge Insurance Brokers.
Bridge Insurance Brokers is working closely with client Capital & Centric on one of these projects, as the developer starts to revive Liverpool’s iconic Littlewoods building. The stunning art deco structure will host Twickenham Studios and Liverpool John Moores University, bringing academia and industry together in a huge facility that flanks one of the main routes into the city centre.
This is a real boost for the North West film and digital entertainment industry and just one example of success for the construction industry itself, as it looks to recover from a period of uncertainty through Covid-19.
The regeneration of existing buildings helps to retain heritage and history, while simultaneously looking to the future. However, it does bring a wealth of challenges and it makes an interesting case for a complete rethink when it comes to insurance.
The traditional route
When the project involves an existing structure, the responsibility to insure the works and usually falls to the site controller or owner, not the contractor. This is normally set out in the JCT contract, yet it is often overlooked until the project is due to start, resulting in a mad dash to get an appropriate policy in place.
The most common route to meet these requirements is for the existing structure to be insured on a property owner’s policy. Standalone policies are then set up for the contract works covers and any non-negligent liability covers. This disjointed approach relies on multiple policies being up-to-date and not being impacted by the market or terms changes at renewal, and it assumes that all parties understand and adhere to the various conditions of the policies too.
In the event of a claim, there can be up to four different policies involved: property owners insurance, contract works, non-negligent liability and contractors liability policies. Each of these can come with different insurers, making for a complex, elongated claims process.
Developers are now realising that as well as getting messy, this route does not protect against every eventuality. A more appropriate, more comprehensive approach that protects the developer and the residential development is an Owner Controlled Insurance Programme.
An OCIP means getting everything lined up right from the outset. The developer is in control and is covered more comprehensively for liability and loss. Existing structures are covered along with the value of the works, including repair and damage; hired-in plant; owned plant; advanced loss of profits, also known as delayed startup; non-negotiable liabilities to cover adjacent properties and the property being worked upon; terrorism; environmental liability; public and property owner’s liability; and an element of design cover.
An OCIP is a simpler way of insuring the works, incorporating multiple covers under one policy, under one wording, and offering expansive covers such as loss of profits. Costs are controlled because everything is rated as one project, as opposed to a series of standalone policies, all potentially with their own minimum premium structures. It will also protect a full development, meaning the developer is less exposed to the risks and can focus on the building work itself.
The whole industry is still a little fraught though and may be for some time. The traditional insurance route is no longer suitable, as we look to regenerate both the region and the construction industry.
An OCIP is the simplest insurance approach for complicated developments. Any developer with a project that involves existing structures like the Littlewoods building should consider an OCIP, to ensure protection from all angles and complete clarity throughout.
For more information on OCIPs and how they can benefit everyone involved in a development, visit the Bridge Insurance website.