Beware What Lies Beneath

Construction companies and piling contractors must do their homework with regard to a site’s ground conditions. Understanding the lie and the geology of the land, by conducting or referencing an accurate site survey, is essential not just for the project but also because an insurer requires all material facts about work undertaken.

Getting valid insurance in place, and accurate pricing for that insurance, requires the underwriter to thoroughly understand the risk – and any changes to it – through information supplied.

Unfortunately, contractors and sub- contractors frequently encounter unanticipated obstacles that affect the risk, intended completion date and project cost. The obstacle could be a hitherto undetected water main, well or burial site. It could be a stratum of rock along a pile line. The HS2 project has even unveiled a previously hidden Roman trading settlement.

Whilst some obstacles could lead to considerable delay, others could make the proposed work more challenging, requiring a change of working method, different equipment and potentially more labour. Insurance alarm bells should ring.

Who bears the cost, may not be stated within the contractual terms agreed at the project’s outset, but the general legal position is that, if a contractor promises to build a structure for an employer, they must do so, irrespective of whether the employer produced the design.2 If not, they can be found in breach of contract and even arguments about lack of prior site access will probably not suffice.

Any switch in methodologies could influence insurance covers and the payment of any future claims, so the insurer needs to be instantly informed. New equipment may have to be used. Piling may have to be to a greater depth than policy terms allow. Contractors could find themselves working on a site with groundwater issues and contaminated risings, or one with collapsed excavations, variable ground conditions or steep gradients. The risk can change.

Trying to combat adverse conditions with the wrong equipment, could also increase the health and safety risk. No matter what the contractual pressure to proceed, a contractor should always remember their duty of care to both employees and hired-in workers.

Essential covers are the legally required Employers Liability insurance and Public Liability protection. It could also be worth considering Excess Liability insurance, which will step in, should a claim exceed the core liability policy’s limit.

A Contractor’s All Risks policy will cover property damage, including improper structure construction and third-party injury and damage claims. If a contractor is a specialist, such as a piling company, a more tailored policy may be required.

But what of the contractual obligations? Purchasing a Performance Bond allows a contractor to guarantee their obligations to their client, offering reassurance that the project will be completed or in the event of breach of contract, direct losses or damages paid to affected third parties.

The message is to work with your broker, advise them and your insurer of everything and listen to advice relating to covers. If not, what lies beneath could catch you out.

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Blackdown House,
Blackbrook Park Avenue

Registered in England No. 4499126 | Atom Insurance Brokers Ltd is authorised and regulated by the Financial Conduct Authority.

The Financial Ombudsman Service (FOC) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at