Does contractor work insurance cover work even before receiving a building permit?
Feb 28, 2019
Client asks:
Does contractor’s works insurance provide coverage from the very first day the work is carried out, even if it started before obtaining a building permit, or is the contractor’s policy valid only once a building permit has been issued? Additionally, is there a difference between a “full” building permit and a “partial” building permit?
Customer asks:
Does contractor work insurance provide protection from the first day the work is performed, even if it began before the building permit was received, or is the contractor policy only valid upon receipt of a building permit? Also, is there a difference between a "full" building permit and a "partial" building permit?
answer
As is known, most policies issued in Israel for insurance of contracting work are complex, complicated and wordy. For the most part, they span 40-70 pages (or more), and there are of course quite a few differences between insurance companies. However, some policies may have a general requirement to carry out the activity according to the law.
In any case, the lack of a building permit is often a material matter that requires disclosure to the insurer, but on the other hand, we also know of (various) situations in which activity may occur without a valid permit. For example (not a closed list):
There was a delay in granting the permit, but the authority approved the construction before receiving the permit.
The permit has expired but the work has not yet been completed (and at a certain and specific point in time, work is being carried out on the site without a building permit).
Carrying out construction work without a permit in an arbitrary manner – against the law.
Situations of this type naturally require special handling. Including providing prior and reasoned notice to the insurance company. In most cases, a surveyor on behalf of the insurance company receives the explanations and information, examines the situation on the ground, conducts discussions with the client, and decides whether or not to approve the feasibility of insurance coverage to the insurance company, depending on the circumstances. This is, in fact, the correct and appropriate process for handling this issue of work "outside the limits of the permit."
It is important to note that in projects where there is complexity with special risks to nearby structures or the environment, the insured has a double and multiplied duty of care to act in accordance with the law. In projects of this type, we (at Rachel Beitach Kettana) recommend acting solely within the framework of the law, and performing work only when a valid building permit is in place.
In conclusion
This question, concerning the validity of a contractor's policy for work done before/after/without a valid building permit, is a matter that requires careful examination depending on the circumstances. According to the working method we have adopted at our insurance agency, we regularly conduct surveys on projects carried out by our clients. The surveyor examines the project plans and receives initial details from the contact person.
If the client requests to begin work on the site before receiving a permit, we draw his attention to the problematic nature of this step, and on the other hand, we draw the surveyor's attention to the matter, requesting his examination, opinion, and response to the matter in the survey. If the explanations are satisfactory, the requested insurance coverage is provided, or not, depending on the matter.