The Insurance Implications
The CDM regulations changed in April 2015 and other than DIY, now apply to virtually all construction work including domestic and maintenance projects, regardless of size and duration.
The regulations require effective health and safety management of sites with rules relating to planning, documentation, communication, control and welfare, as well as the requirement to appoint suitable people with the right skills and experience to undertake the responsibility of the key roles relative to the project.
In particular, smaller builders and contractors may need to adapt their working practices to comply with the new regulations as regards planning, site specific risk assessments and communication with both the client and other contractors on site. As a minimum, a Construction Phase Plan is a requirement for all sites.
For those breaching the new regulations, criminal sanctions are available to the authorities including fines and imprisonment for serious offences so, if you have not already done so, you should check what you need to do under the new regulations.
Full details of the regulations can be found on the HSE website below:
Will the new CDM Regulations affect insurance cover? – Yes
You should tell your insurers if you are taking on wider responsibilities under the new regulations, such as Principal Designer or Principal Contractor and also consider Professional Indemnity insurance if it is not already in place.
It is fairly obvious that Insurers will want you to comply with the new CDM regulations and if you are in breach, it will not help your insurers defend a claim for injury or damage. It is also obvious that an adverse claims experience is likely to increase your insurance premium.
Under the conditions of your policy, you are required to tell Insurers about any fines or sanctions relating to health and safety, and companies that have faced sanctions can expect to pay higher premiums. Failure to notify insurers of any sanction may mean that a claim is not paid.
However, should you breach or be accused of breaching the CDM regulations, your policies are likely to provide some protection.
Employers and Public Liability Policies
Most insurers provide an extension of cover for defence costs relating to criminal proceedings brought in respect of breaches of health and safety (generally the breach must be linked to an injury claim under the policy), although the extension in many policies applies to specific Acts of Parliament and may need to be modified to cover the new regulations.
The extension provides cover for the company and any partner, director or employee, but only if requested by the company. However, any deliberate or intentional acts are excluded and insurers will not pay any fines and cannot keep you out of prison if you are guilty.
Design and Construct Professional Indemnity Policies
Professional Indemnity Policies for construction trades and professions are usually extended to cover criminal defence costs arising from a violation of CDM regulations, subject to similar caveats to Employers and Public Liability policies. However, an ‘inner limit’ rather than the full policy indemnity limit usually applies and in addition, there is often a prospects of success condition, whereby the insurers will agree to pay defence costs if they feel a successful defence may avoid a claim under the Professional Indemnity Policy.
Directors and Officers Liability Policies
Wider cover is available for limited companies, PLCs and limited liability partnerships and takes away any uncertainty as to whether individual directors will be indemnified by the company policies. A few insurers offer cover for partnerships.
Defence against health and safety offences is just one aspect of cover provided by Directors and Officers policies and helps to protect the personal assets of a director or officer.
For more information follow the link to our factsheet:
Property Owners Policies
The CDM regulations also impose a range of responsibilities on those having building work undertaken. The property owners liability cover within property policies usually provide cover for health and safety legislation defence costs, but again, you should check they include the new CDM regulations.
For more information speak to your usual Nsure contact or speak to Phil Bristow on 01903 520200 email firstname.lastname@example.org