JCT Insurance Options Explained: The Subcontractor’s Risk Guide

When you sign a JCT subcontract, the insurance schedule is often treated as secondary paperwork until a catastrophic event occurs on site. Main contractors frequently modify standard insurance terms using bespoke amendments to pass high policy excesses, existing structure liabilities, or broad indemnity responsibilities down to individual trade contractors, creating severe commercial revenue loss before work even begins.

Understanding how JCT insurance options operate and where your liabilities end is essential to protecting your trading margin and commercial solvency.

1. The Core JCT Joint Names Insurance Structure (Options A, B, and C)

Under standard JCT contracts, the physical works must be protected by “Contractor’s All Risks” (CAR) insurance. This is managed under three primary contractual options:

• Option A (New Buildings – Contractor Insures): The main contractor takes out a Joint Names All Risks policy covering the full reinstatement value of the new works plus professional fees.
• Option B (New Buildings – Employer Insures): The client or employer takes out the Joint Names All Risks policy covering the works directly.
• Option C (Existing Structures – Employer Insures): Used for refurbishments, alterations, and fit-outs. The employer must insure the existing structure and its contents against “Specified Perils” (such as fire, lightning, explosion, flood, and burst pipes) in joint names with the main contractor.

The Subcontractor Trap Under Option C

In refurbishment work, main contractors often attempt to delete the employer’s joint-names obligation or slip in clauses stating that the subcontractor must indemnify them for damage to existing buildings. If a pipe bursts or hot works cause a blaze, the employer’s insurer may look to recoup the entire loss directly from your Public Liability policy.

2. Insurance Policies Every Subcontractor Must Carry

Regardless of whether the project runs on Option A, B, or C, subcontracts require you to maintain your own operational coverage:

• Public Liability (PL): Typically mandated between £5,000,000 and £10,000,000. It covers third-party bodily injury and accidental property damage caused by your physical operations on site.
  The Critical PL Trap: Holding a £5m policy does not protect you from contractual liabilities. Standard public liability policies explicitly exclude pure economic loss, project delay costs, and bespoke indemnity obligations written into JCT Clause 6.1 and 6.2. If a main contractor deletes liability caps, you must pay uninsurable commercial losses straight out of your trading profits. Read my complete guide on Subcontractor Insurance vs JCT Indemnity Clauses.
• Employer’s Liability (EL): Statutorily required at a minimum of £5,000,000 (regularly mandated at £10,000,000 under commercial tenders).
• Professional Indemnity (PI): Mandatory if your package includes design responsibility (such as under the Design and Build Sub-Contract). Check my detailed breakdown of JCT Design & Build Subcontract Clause 4 payment traps to ensure you do not sign off on aggressive design risks or payment delays.
• Clause 6.5.1 Insurance (Non-Negligent Damage): Required when work poses a specific risk of collapse, subsidence, vibration, or removal of support to neighbouring properties, even when work is carried out without negligence. Read my detailed breakdown on what JCT Clause 6.5.1 insurance covers and who pays the premium to make sure you do not get stuck with uninsurable site liabilities that cause severe revenue loss.

3. Red Flags in Amended Subcontract Insurance Clauses

Before you sign a commercial subcontract, check your documentation carefully for these three aggressive amendments:

1. Passing the Policy Excess Down: A clause stating you must reimburse the main contractor for their project CAR deductible (often £10,000 to £25,000) regardless of fault.
2. Subrogation Waiver Deletion: Removing the provision that prevents insurers from suing subcontractors after paying out a claim under the Joint Names policy.
3. Uncapped Indemnities: Wording requiring you to indemnify the main contractor against “any and all losses” arising from project delays, site incidents, or adjoining property disputes. If disputes lead to cash flow hold-ups, read my operational guide on using Section 112 to legally suspend work for non-payment.

Always demand to see the main contract insurance details before executing your agreement, and ensure your broker confirms that your policies fully cover any bespoke liabilities written into the subcontract terms.