Building Insurance Backed Guarantees (IBGs)
Insurance Backed Guarantees (IBGs)
Even the best builders can occasionally ‘go bust’ through no fault of their own, or be unable to complete the job owing to ill health or accidents. This can be difficult for everyone involved, particularly when you have laid out large sums of money and there is rain coming in through a hole where your roof used to be. The only way to be absolutely sure that this doesn’t happen to you is to go for an Insurance Backed Guarantee scheme, or IBG. It is important to distinguish between these schemes and builders who simply advertise ‘all work guaranteed’. This affords no protection if the builder goes bankrupt.
There are a number of building industry guarantee schemes which may he worth joining if you are planning a long and involved project, or one in which a delay would constitute a serious problem. You may find that you are covered for the completion of unfinished work if the contractor concerned is a member of a trade association, but you generally need to notify the association before work starts in order to be accepted for cover.
If the work you are having carried out is covered by one of the guarantee schemes mentioned below, include their details in the contract.
Here we list some of the main schemes:
Building Guarantee Scheme (UK) Ltd
Sponsored by the Construction Employers Federation, this covers customers in disputes about quality and also provides two and a half years’ cover after the completion of jobs costing between £500 and £100,000.
Federation of Master Builders IBG
A Masterbond Warranty from a Federation of Master Builders member is a safe option. For 1.5 per cent of the total cost of the job, it protects against defects due to faulty workmanship and materials 14 two years, and against structural defects for a further ten years. Contact FMB for further details.
Guarantee Protection Insurance Company (GPI)
This is a guarantee scheme specifically for damp and timber treatments carried out by member firms of the British Wood Preserving and Damp-proofing Association (BWPDA). A one-off payment provides full cover for ten years for structural waterproofing or 20 years for remedial wood treatment, damp-proofing and wall ties. It is intended to cover customers if the original treatment firm is no longer in business.
Homepro offer a range of flexible IBGs, including guarantees of up to ten years, deposit indemnity, and a comprehensive IBG which is index-linked, so that the value of your work is protected against inflation.
Independent Warranty Association (IWA)
Underwritten by Lloyds, the IWA has traditionally offered cover mainly on windows, , kitchens and bathrooms. It now also provides a ten-year IBG that does not exclude any components and will give protection in the event of a contractor going out of business. It ensures that any incomplete work is finished, and also that any necessary remedial work is done.
Joint Contracts Tribunal IBG
The Joint Contracts Tribunal allows for an IBG option on its Minor Works Contracts, which can provide cover for disputes about the quality of the work as well as against the insolvency of the contractor, on jobs ranging from £500 to £100,000.
According to the Association of British Insurers, Liability Insurance pays for compensation when someone has been held legally liable for an adverse event — from a plasterer falling off a ladder to a roof falling in during a . This type of insurance is generally required by businesses, not individuals, and comes in two main types.
Employers’ Liability (EL) insurance is compulsory by law for nearly all employers, who must insure for a statutory minimum of £5 million, but in practice, most policies offer £10 million minimum cover. Employers’ liability insures the employer against their legal liability for injury, disease or death to employees sustained by them and arising from their employment.
Public Liability Insurance (PLI) covers a business’s legal liability to pay damages to members of the public for death, injury or damage to their property which occurs as a result of business activities. With the opportunities for accidents offered by the building trade, a builder without Public Liability Insurance is one to avoid.
PLI also covers the builder’s legal fees and costs if he gets taken to court by you, the client. PLI for £1,000,000 may seem a lot, but sometimes single awards for injury can exceed that, and if there is a risk of, say, a spreading fire or multiple personal injuries, there could be several claimants competing for a piece of the compensation pie.