Overview
Insurance is often raised in party wall discussions, especially where works are complex or high risk. It can be relevant, but it is not the same as security, compensation or an automatic guarantee.
Owners should understand what insurance can and cannot do.
Older practice
Older party wall awards often included standard clauses requiring the building owner to maintain public liability insurance.
That approach sounds sensible, but it has limitations. A policy schedule does not necessarily tell the adjoining owner whether:
- the relevant risk is covered;
- exclusions apply;
- the limit is sufficient;
- the adjoining owner can claim directly;
- funds will be available quickly if works are abandoned.
Surveyors are not insurance brokers
Party wall surveyors are not normally qualified to review insurance wording in detail. If they try to approve a policy, they may create false reassurance and potential responsibility for matters outside their expertise.
Where insurance is genuinely important, specialist advice should be obtained.
Practical alternatives
Depending on the risk, more useful protections may include:
- security for expenses;
- project-specific insurance;
- clear contractor insurance requirements;
- method statements and engineering review;
- carefully drafted damage clauses;
- retention under the building contract.
Security for expenses is often more direct because it is intended to make funds available if needed.
What adjoining owners should ask
Adjoining owners should not simply ask: "Is there insurance?"
Better questions include:
- what specific risk are we trying to protect against?
- is security for expenses justified?
- who has access to funds if works stop?
- does the contractor have suitable cover?
- are the method and programme credible?