The informal nature of many of building contracts also means the builder could be without insurance themselves and any attempt to sue would not lead to an adequate recovery of damages.
Angela Hughes, commercial underwriting manager at Standard Insurance Limited says homeowners doing even simple additions generally only have a standard homeowners insurance policy in place which excludes building or construction work. “This means that in the event of a serious claim arising from the construction work or alterations, ordinary South Africans could lose their homes as they would not have adequate insurance protection in place,” says Hughes.
According to Hughes, homeowners can protect themselves against such risk in two ways. “Firstly, ensure that the builder you have engaged has adequate cover is place before commencing work. This cover must include a Contractors All Risk policy to cover the work being done as well as liability cover. Secondly, the homeowner themselves can purchase a Contractors All Risks policy covering the construction or alterations taking place.”
A once-off Contractors All Risk policy and premium to cover the building work need not be cost prohibitive.
“These policies can be flexible, based on the project. Premiums start as low as R1 500 per project; it is important to take all the risks into account and not to just go for the lowest form of protection. For example, the policy should in most cases include a neighbour’s property in case of fire – just imagine the scenario of your neighbour knocking on your door after a fire and claiming damages for his house as well as yours,” adds Hughes.
Your property insurance policy should be updated once building is complete to avoid the ‘average’ being applicable in the event of a loss. Many only consider doing this at the annual renewal stage, which could be too late.
The dramatic increase in building activity across the country has broader ramifications when any injury is caused to the public at large. It is therefore crucial for contractors dealing with the public to ensure they are adequately insured.
Some professions are more vulnerable than others when it comes to public liability risk – those doing major construction and building work certainly count amongst them. “They face too many risks to not have adequate liability insurance in place,” says Hughes.
The number of accidents and related damage claims are on the rise as infrastructure development continues to gather pace. For example, there was national outrage and sadness when the temporary structure supporting the construction of a pedestrian bridge on Johannesburg’s main motorway collapsed‚ killing three people and injuring 19. Reports soon emerged of inferior products allegedly being used and the different contractors were soon at loggerheads in court as to who was actually to blame. In the corporate and commercial space, a dedicated contract and multi-peril insurance is crucial.