Cladding Risks and Professional Indemnity Insurance
Following the Grenfell Tower fire in 2017, cladding and fire safety issues have been thrust into the limelight and have caused insurance premiums to skyrocket.
The government announced a ban on the use of combustible materials on high rise buildings in 2018 as a result of the fire at Grenfell and the new legislation came into effect later that year.
Despite government financial support towards remedial works and the change to building regulations, many insurers are still naturally nervous surrounding ‘cladding’ issues with the landscape remaining uncertain and the financial support limited.
Many Professional Indemnity insurers have since added exclusions for cladding products in their policies and many policyholders have seen a dramatic increase in premium bonds surrounding this cover, where it is included.
What does this mean for the construction industry?
Despite support from the government towards remedial works, many have stated that this isn’t enough to complete the works and to do so quickly enough, leaving insurers very nervous and reluctant to write cover for the buildings.
Biba, the British Insurance Brokers’ Association, have stated that the government need to also create a temporary PI solution to help combat the delay in making buildings safe.
In their latest 2021 manifesto, Resilience, Biba have claimed that remedial works on unsafe buildings is being delayed due to the lack of financial support and the lack of PI Insurance and is calling on the government to increase both the size and the scope of the Building Safety Fund.
How can I get help with Cladding Insurance?
The Team at SJL Insurance Services can support you with your Professional Indemnity and Builders Insurance needs, including cover for cladding related products.
Insurance markets will be very careful to understand the work where you have undertaken all of your own design or are fully responsible under a client specific contract for all designs. This will includes specification of materials.
If this is the case, please provide full experience of this work, all of the internal risk management & supervision of work and of those external consultants you use, this will offer more comfort to the insurer and offer a fair and clear presentation to them.
What other factors could influence the annual premium?
The other main factors that drive premium costs for Cladding Company Professional Indemnity Insurance are:
- FINANCIAL TURNOVER – This indicates the amount of work undertaken and therefore the amount of risk insurers are accepting. If your business has contracts that extend over a period of 12 months or more, please speak to us as we can help smooth premium cost over multiple policy years.
- DESIGN WORK SPLITS – Insurers rate the different disciplines carefully so be sure to give an accurate split in disciplines. Sub-contract our more technical elements be sure to explain to who and how you check their credentials, where they hold Professional Indemnity Insurance and to what minimum levels of cover.
- CLIENT CONTRACTS – Insurers will consider the Total Contract Value and type of work for the biggest contracts, both over the last three years and for the next 12 months. Make sure to include this information in any form.
- CLADDING INDUSTRY EXPERIENCE – CVs required for design consultants.
- CLAIMS/LOSS HISTORY – If you have had any previous claims, please provide full details.
If you have any questions regarding a new or existing Professional Indemnity or Buildings Insurance, please contact us today.