JCT contract insurance requirements explained

In the UK construction sector, Joint Contracts Tribunal (JCT) contracts are the gold standard for defining how building projects are managed. However, for many contractors and property owners, the insurance clauses tucked away in Section 6 can feel like a legal maze that is notoriously easy to get wrong.

At Premier Insurance, we have been navigating these requirements since 1983. As a BIBA-member broker, we see first-hand how a misunderstood clause can lead to a breach of contract before a single brick is laid. This guide breaks down the essential insurance sections of a JCT contract into plain English, helping you understand your obligations, the risks involved, and how to verify cover effectively.

Deciphering the JCT Insurance Clauses

When you sit down with a JCT contract, you will inevitably encounter three specific placeholders: Clauses 6.4, 6.5, and 6.7. Each addresses a different type of risk, and getting the wrong one "ticked" in the contract particulars can leave a major gap in your protection.

It is important to remember that these aren't just suggestions. These are contractual obligations that, if ignored, could allow the other party to terminate the contract or claim for damages. Because we are regulated by the FCA, our role is to ensuring you aren't just "buying a policy," but fulfilling a legal duty that protects your balance sheet and your reputation.

Public Liability: The Foundation (Clause 6.4)

Clause 6.4 is the starting point for almost every UK construction project. It requires the contractor to maintain Public Liability insurance. This covers legal liability for accidental injury to third parties or damage to third-party property arising from the works.

Standard JCT terms usually require this cover to be in the joint names of the Employer and the Contractor. This prevents the insurer from trying to recover costs from one party if the other was at fault (known as subrogation). For a small domestic extension, you might see a requirement for a £2 million limit. However, for commercial sites or projects near public highways, £5 million or £10 million is often the baseline.

Pricing for this varies significantly based on the project value. For a contractor with an annual turnover of £250,000, adding a specific JCT project extension might cost approximately £35.00 to £60.00 per month, depending on the complexity of the build and the depth of the indemnity required.

Non-Negligence Insurance (Clause 6.5.1)

This is perhaps the most misunderstood clause in the JCT suite. Standard Public Liability insurance only pays out if the contractor is found to be negligent (i.e., they did something wrong). But what happens if you are piling or excavating, you follow every professional guideline perfectly, and the neighbour’s house still cracks because of "subsidence, heave, or vibration"?

Since the contractor wasn't negligent, the Public Liability policy won't pay. Clause 6.5.1 (formerly 21.2.1) fills this gap. It provides "Non-Negligence" cover for damage to neighbouring property. This is usually taken out in the joint names of the Employer and Contractor. If you are working in a tight urban environment like London or Manchester, where properties are physically joined, this cover is often non-negotiable for the Employer's peace of mind.

Insuring the Works and Existing Structures (Clause 6.7)

Clause 6.7 deals with "All Risks" insurance for the project itself. It is split into three options—A, B, and C—and choosing the wrong one is the most common mistake we see.

• Option A: For new builds. The contractor takes out a Joint Names All Risks policy for the full value of the project.
• Option B: For new builds. The Employer takes out the policy. This is rarer but sometimes preferred by developers with existing master policies.
• Option C: For renovations, extensions, or repairs to existing buildings. This requires the Employer to insure both the existing structure and the new works in joint names.

Option C is where many projects hit a snag. Most standard home insurance providers underwritten by big-name UK insurers will not allow "Joint Names" on their policies, nor will they cover the building once works begin. This often requires a specialist renovation policy to be put in place by the Employer, which can cost anywhere from £80.00 to £250.00 per month depending on the property value and the scope of work.

Matching Your Limits to the Contract

The JCT contract will specify a "limit of indemnity." You must ensure your policy matches or exceeds this. If the contract asks for £10 million and your standard policy is only £5 million, you need an "excess of loss" or "umbrella" policy. We frequently help contractors bridge this gap. Often, adding an extra £5 million of cover for a specific six-month project might cost a one-off premium of around £400 to £700, depending on the risk profile.

Be wary of "aggregate" limits. If a policy is "in the aggregate," each claim reduces the total pot of money available for the rest of the year. Most JCT contracts require the limit to be "any one occurrence," meaning the full limit is available for every single claim made during the period.

How to Evidence Cover to the Employer

In the past, a simple "To Whom It May Concern" letter was enough. Today, Employers and their solicitors are more forensic. To satisfy a JCT requirement, you will likely need to provide:

• A Broker Letter confirming the insurance is in "Joint Names" (if applicable).
• Proof that the "Indemnity to Principals" clause is active.
• A schedule showing that the specific JCT clauses (like 6.5.1) are explicitly noted.
• Evidence of the expiry date and confirmation that premiums are paid up to date.

We often recommend providing a full policy wording alongside a summary of cover. This transparency prevents delays in "breaking ground" while legal teams argue over definitions.

The Role of Professional Indemnity (PI) Insurance

While often handled outside the Section 6 clauses, if a contractor has any "design responsibility" (Design and Build), they will need Professional Indemnity insurance. If you suggest a change to the architect's plans or choose a specific material that later fails due to a design flaw, PI is what protects you.

HMRC and industry bodies like BIBA emphasize the importance of PI for those providing professional advice. For a small contractor, a PI policy with a £250,000 limit might start around £25.00 per month, but for JCT contracts, the requirement is often £1 million or more.

Common JCT Insurance Questions

Does my standard Public Liability cover JCT requirements?

Usually, no. Standard policies often exclude "contractual liability" or lack the specific "Joint Names" wording required by JCT. You almost always need an endorsement or a specific project policy.

Who is responsible for the "Existing Structure" in a renovation?

Under JCT Option C, the Employer (the property owner) is responsible. However, many owners find their standard insurers won't help, so the contractor often ends up liaising with a broker like Premier to find a solution that satisfies both parties.

What happens if I don't get Clause 6.5.1 insurance?

If you cause damage to a neighbour without being negligent (e.g., through unavoidable vibration), and you don't have this cover, the Contractor or the Employer could be held personally liable for the repairs, which often run into the tens of thousands of pounds.

At Premier Insurance, we draw on over 40 years of experience to solve these complex requirements. We have access to more than 200 insurers, allowing us to compare the market and find the specific JCT-compliant wording that fits your project and your budget.

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Speak to a UK insurance broker

Premier Insurance has been arranging UK tradesmen insurance since 1983. We are FCA regulated, BIBA members, and place cover with 200+ insurers including Lloyd's of London. Call 020 8908 2426, WhatsApp 07954 331362, or email hello@premier-insurance.co.uk. See our Tradesmen Insurance page for full cover details.