How the word defective in an exclusion led to an unintended outcome

ClaimsGeneral InsuranceInsurance BrokingRisk

Construction policies or contract works policies are effectively house policies for houses in the course of construction. A house policy does not insure a new house under construction. It provides limited cover during minor alteration work only, once constructed. The...

C

Crossley Gates — Partner, Keegan Alexander Barristers & Solicitors

11 May 2026

3 mins read

A

How the word defective in an exclusion led to an unintended outcome

Construction policies or contract works policies are effectively house policies for houses in the course of construction.

A house policy does not insure a new house under construction. It provides limited cover during minor alteration work only, once constructed.

The owner must insure the erection of a new house under a Construction Policy.

THE RISKS OF CONSTRUCTION

Obviously, a house in the course of construction faces risks not present once it is completed. The exposure to the risk of damage is much greater as multiple different trades carry out their building activities.

While a house under construction faces the usual perils of fire, storm or flood damage etc, it also faces the perils of damage caused by faulty design, faulty workmanship and faulty materials during the construction process.