Real Estate Tip of the Week: Whose liability is it anyway? - DAC Beachcroft

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Real Estate Tip of the Week: Whose liability is it anyway?

Published 14 November 2016

Commercial landlords can expect more requests from tenants for the landlord to provide insurance cover for tenants' fit-out contractors as a result of the issue of the new 2016 Editions of the JCT Building Contracts (JCT).

The new editions include an amendment to the insurance clauses which apply when works are being carried out to/in an existing building.

Previous editions of the JCT assumed that:

  • the contractor's "Employer" was the same person as the building owner
  • the Employer would arrange for its insurance cover for the building to also cover the contractor for the risk of damage to the remainder of the building.

In a commercial/multi-let property it will often be the landlord who arranges insurance cover for the building. Many tenants acting as the "Employer" under fit-out contracts will in the past have failed to appreciate that they were not complying with the insurance requirements of the contract by not arranging an extension of the landlord's cover for the contractor.

The new contract highlights this as an issue. The new provision allows for alternative insurance solutions where the "Employer" does not arrange the insurance of the building but does not specify what those will be. The intention is that a tenant "Employer" who does not insure the building would enter into early discussions with the landlord to agree insurance arrangements.

Landlords will need to consult with their insurers when faced with a request from a tenant to cover a fit-out contractor for damage to the remainder of the building and will also want to ensure that any additional premiums as a result of such cover are recovered from the tenant.


Benjamin Thomas

Benjamin Thomas


+44 (0)117 918 2327

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