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New fire safety insurance clause protects high-rise cladding repairs

Tuesday 4th October
New fire safety insurance clause protects high-rise cladding repairs

The International Underwriting Association (IUA) has published a new fire safety insurance clause that insures cladding work completed under the government’s Building Safety Fund.

The IUA, in collaboration with the Department for Levelling Up Housing and Communities (DLUHC), created a wording that protects against fire risks. The clause covers work completed under the government’s £4.5bn Building Safety Fund, which reopened in July. The Building Safety Fund was introduced to cover the cost of such refurbishment work on high-rise residential blocks over 18m. The clause is freely available for use by underwriters looking to provide professional indemnity insurance for building cladding remediation work. 

The clause accelerates the removal of unsafe cladding and encourages a greater safety culture within the construction industry. It will also provide insurers with increased confidence in the risk management processes used in construction. 

Levelling up Secretary, Greg Clarke, said he hoped the move would speed up the removal of unsafe cladding, encourage a greater safety culture within the construction industry and provide insurers with increased confidence in risk management processes employed by contractors. 

IUA Director of Legal and Market Services, Chris Jones, said:

Our new model clause sets out several key risk management processes that will ensure work is performed within recognised industry standards.

He added:

“The market for construction professional indemnity insurance has been difficult in recent years, reflecting concerns about the potential for historic liabilities to develop into future claims following the Grenfell Tower tragedy. 

Each new risk must continue to be assessed on a risk-by-risk basis, of course, but the clause should provide underwriters with greater confidence to offer effective insurance solutions for future work. 

A survey of IUA members in September last year revealed a cautious willingness amongst IUA members to underwrite fire safety risks on new projects to remove defective cladding from high rises. 

Around two-thirds of respondents stated they would provide a limited form of cover, but only 4% were happy to offer unrestricted protection. 

The poll was carried out by the IUA’s Construction Professional Lines Working Group, which was established in 2019 to encourage greater engagement between insurers, government, regulators, and construction firms. 

Download a copy of the IUA Building Safety Fund Cladding and Fire Safety Limited Exclusion and Aggregation Clause > 

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