Does Builders Insurance Cover Damage to a Neighbouring Property?

When you’re working on a property, some damage to close neighbouring properties is always a risk. But will your builders insurance cover it?

Yes – under the public liability section. If you have builders insurance, your policy will include public liability, which will cover damage to third party properties.

Third party means any property which isn’t yours. Public liability is a vital component of your builders insurance which protects members of the public from the many risks associated with building work.

In this article, we’ll cover the following questions:

• How does public liability insurance help in a claim?
• Am I covered for damage to a third party property?
• What happens if I damage my client’s neighbour’s house?

Ultimately, if you are at fault, you should rectify what’s gone wrong. But it’s your responsibility to make sure you have the right insurance.

Make sure all works are done properly

Accidents happen, even to professionals. That said, it’s entirely your own responsibility to do the work you’re assigned to do safely and to specification. Do not attempt a big, messy, serious job such as a house extension if you aren’t competent enough to do so.

And, of course, you absolutely must have builders insurance in place before you begin. If you haven’t got the proper builder’s liability insurance and a neighbouring property suffers damage in the process, there is nowhere for repair money to come from. If you cannot pay out of your own pocket, it’s much more likely a messy legal struggle will ensue and your business and your client’s relationship with their neighbour will suffer.

If the damage was accidental, it will definitely fall under your public liability insurance. However if the damage was due to your negligence, you will need to have Professional Indemnity Insurance to help cover it.

This will cover you as a builder against failures to provide good advice to your client regarding the care and maintenance of their work, failures of service such as incorrect installation, and failures of design such as making a doorway too large.

Product Liability insurance will protect you and your clients from faulty materials. Say you bought warped joists from their supplier and no one noticed until your client’s neighbour reported a crack on their adjoining wall – your Product Liability cover will cover the claim.

In any case the burden of proof is on the neighbour

If your client’s neighbour suspects that building work done by you is to blame for a crack, it’s up to them to prove it.

Naturally, with all the noise and commotion next door, they may be more vigilant than usual. This can lead to them spotting faults they may have otherwise gone unnoticed. Mean-spirited neighbours may even try and blame issues arising from their own negligence on building works.

If you are positive the damage is not a result of your activity, the onus is on the owner of the neighbouring property to investigate the cause. A peaceful resolution is within reach if the neighbour cares enough to hire a building or roof surveyor to come out and inspect the damage. They can claim for the cost of this survey on their home insurance.

If the surveyor’s findings prove that you were indeed negligent and your builders insurance cannot cover it, you have a couple of options. You can either agree to pay for the damage and be done with it, or you can hire your own surveyor for a second opinion.

Remember, cracks can happen naturally

Ground heave and subsidence can cause cracks in exterior and interior walls overnight, just like when a builder is constructing an extension next door. But this kind of damage is usually easy to spot for its diagonal, jagged appearance. These cracks are thicker than the hairline cracks other factors cause, and they will appear in the plaster indoors as well as outdoors. Subsidence cracks tend to be thicker at the top.

Any standard home insurance policy will cover subsidence, landslip or ground heave of the site. This type of event is not usually easy to predict, and therefore is an insurable risk.

However, some areas of Ireland are more stable than others. For example, home insurance won’t cover you or your neighbour for subsidence if you live in or near Cork City. This is because this part of the country is more susceptible, and therefore the risk is more predictable.

If you have any questions on builders insurance, contact us today and we can advise you on the matters discussed above, and any other builders insurance issues. We look forward to helping you!