11.24

1. The Construction Contracts Bill should contain a provision for compulsory latent defects insurance for 10 years from practical completion for all future new commercial, retail and industrial building work (including any such public sector schemes), with a minimum value cut off point which would be subject to periodic review in the light of movement of building costs.

2. The basis of the insurance should be as defined in paragraph 11.18(2), but with cover for rental income loss /additional rental expenditure only as a voluntary clause for the client. (More comprehensive cover could be negotiated.)

3. The policy should require the cost of the premium to be shared amongst the principal participants in the project, and exclude subrogation.

4. It would be possible to eliminate any excess, if the participants are prepared to pay extra, but this should not be a statutory requirement.

5. The date of introduction of the new provision should allow proper time for future projects to be priced to take account of this additional cost and for the insurance market to prepare for its introduction.

6. If it were to appear that such legislation might be delayed, the organisations responsible for contract conditions (including Government Departments) should consider inserting such a clause or clauses as a contractual requirement within existing forms of contract for building work, including the New Engineering Contract.

7. The insurance companies, in conjunction with clients and the industry, should set up a Quality Bureau, perhaps based on the Construction Quality Forum, with a levy to fund it through an addition to the insurance premium. The levy should be used for research and information feedback, to raise quality standards and site performance.