If you’ve ever opened a JCT contract and felt your eyes glaze over at the insurance options, you’re not alone. JCT contracts are widely used across the UK construction industry, but the insurance requirements can be confusing—especially when you get into the detail of the insurance “options” and the schedule references like DE3 and DE4.
This guide breaks down JCT contract insurance requirements in plain English, with a practical focus on what DE3 vs DE4 usually mean, how they affect your construction insurance programme, and the common mistakes that cause disputes when something goes wrong.
Important note: JCT forms and schedules change between editions and project types. Always check the exact contract you’re using and the insurance schedule in your documents.
Insurance in a construction contract isn’t just a “nice to have”. It’s the mechanism that:
Allocates risk between employer (client) and contractor
Ensures there’s money available to rebuild/repair after insured damage
Protects against third-party injury and property damage claims
Reduces the likelihood of litigation after a loss
If the contract says one party must insure and they don’t (or they insure incorrectly), you can end up with:
Uninsured losses
Delayed practical completion
Arguments about who pays for reinstatement
Breach of contract claims
Problems with funders, landlords, or warranty providers
Most JCT insurance requirements boil down to a few key categories:
Covers injury to third parties and damage to third-party property arising from the works.
Typical examples:
A member of the public trips near the site hoarding
Dust or vibration damages a neighbouring property
A delivery vehicle damages a third-party car
Mandatory in most cases where you employ staff (including labour-only arrangements depending on the facts). Covers injury/illness claims from employees.
Often called Contractors’ All Risks (CAR) or Contract Works insurance. Covers physical loss or damage to the works in progress, including materials on site (and sometimes in transit or in storage).
Typical examples:
Fire damages a partially completed extension
Storm destroys temporary works
Theft of materials from site
Where you’re working on an existing building (refurbishment, extension, fit-out), the contract often needs clarity on who insures the existing structure.
Where design responsibility exists (design & build, contractor design portion, or significant temporary works design), PI may be required.
This is a big one. It’s insurance for damage to neighbouring property caused by certain construction activities even where there is no negligence.
It’s commonly required for:
Underpinning
Piling
Vibration
Removal or weakening of support
This is frequently arranged as an extension to public liability or as a standalone policy, and it often has strict conditions and sub-limits.
In many JCT arrangements, the insurance requirements are set out in the contract particulars and/or insurance schedules, and the contract will reference specific insurance “details” or “entries” that are sometimes labelled DE items.
In practice, when people say “DE3 vs DE4”, they’re usually talking about two different approaches to who is responsible for insuring the works and the existing structure, and how the policy should be arranged.
While the exact wording depends on the JCT form and edition, the practical difference is typically:
DE3: The contractor arranges the contract works insurance (and sometimes related covers) in their name (often jointly noting the employer).
DE4: The employer arranges the contract works insurance (often under an existing property policy or a project policy), with the contractor noted.
Think of it as:
DE3 = Contractor insures (more common on smaller projects)
DE4 = Employer insures (more common where the employer has a strong property programme, funder requirements, or complex existing structures)
Under a DE3-style arrangement, the contractor is typically responsible for putting in place contract works insurance for the project.
This often includes:
Contract works (the new works)
Materials on site
Sometimes temporary works (depending on policy)
Sometimes existing structures (only if specifically required and accepted by insurers)
Simpler: the contractor “just sorts it”
The contractor controls the site and can align cover with their method statements
Often quicker to mobilise on smaller jobs
DE3 can be risky for contractors if the contract expects cover that:
Their annual policy doesn’t provide
Requires joint names wording they can’t obtain
Needs a higher sum insured than their policy limit
Includes existing structures (which many CAR policies exclude or restrict)
Underinsured contract value: contract works sum insured not matching the full reinstatement value of the works
Incorrect basis of settlement: indemnity vs reinstatement wording
No joint names: employer expects joint names but contractor only has “principal’s interest” noted
Exclusions that bite: defective workmanship/design exclusions misunderstood
No cover for existing structures: huge issue on refurb/extension projects
Under a DE4-style arrangement, the employer arranges insurance for the works—often because:
The works are within/attached to an existing building
The employer already has a property policy covering the premises
A funder/landlord requires a specific insurance structure
The employer wants a single project policy to cover multiple contractors
The employer’s policy might be:
A project-specific contract works policy
An extension to an existing property policy
A “contract works” section within a wider programme
Less pressure to extend annual CAR limits
Existing structures may be easier to insure under the employer’s property programme
Reduces duplication of cover
If the employer arranges cover but doesn’t correctly include:
The contractor’s interest
The correct contract value
Appropriate perils (e.g., flood, escape of water)
Reasonable excess levels
…then disputes can arise quickly.
Policy doesn’t actually cover contract works: some property policies exclude works in progress unless specifically endorsed
Contractor not noted correctly: insurer disputes the contractor’s right to claim
Excess too high: contractor can’t absorb it, delays repairs
Unclear responsibility for uninsured losses: contract wording not aligned with policy
|
Topic |
DE3 (Contractor insures) |
DE4 (Employer insures) |
|---|---|---|
|
Who arranges contract works insurance? |
Contractor |
Employer |
|
Typical project type |
New build / smaller works |
Refurb/extension / complex sites |
|
Existing structures |
Often excluded or limited |
Often easier to include |
|
Admin burden |
On contractor |
On employer |
|
Common dispute |
“You didn’t insure what the contract required” |
“Your policy didn’t respond / contractor not covered” |
|
Best for |
Straightforward builds with clear scope |
Projects tied into existing buildings or landlord/funder requirements |
Regardless of DE3 or DE4, you’ll usually still see:
Contractor to maintain public liability to the limit stated in the contract particulars
Contractor to maintain employers’ liability (commonly £10m)
Professional indemnity where design responsibility exists
In other words, DE3/DE4 mainly affects material damage insurance for the works/existing structures, not the everyday liability covers.
Many JCT contracts require non-negligence insurance for a specified limit.
Key practical points:
It’s not the same as public liability
It may be unavailable for certain high-risk works (or only available with strict conditions)
It often comes with sub-limits and higher excesses
It commonly excludes damage to the works themselves (it’s about third-party property)
If your contract includes this requirement, treat it as a separate workstream early—don’t leave it until the week before start on site.
Here’s a simple checklist you can use before signing:
Don’t assume. Confirm what the contract says and what the insurance schedule requires.
Contract works: full reinstatement value of the works (not just the contract price if that’s not enough)
Existing structures: correct declared value
Public liability: contract-required limit (often £5m or £10m)
PI: limit and duration (e.g., 6 or 12 years)
If joint names are required, your broker should obtain the correct policy endorsements.
Pay particular attention to:
Defective workmanship/design exclusions
Wear and tear
Gradual deterioration
Pollution exclusions
Flood exclusions (especially in high-risk postcodes)
From commencement date
Through the construction period
Through any maintenance/defects period if required
If the excess is too high for the responsible party to absorb, you’re storing up problems.
Under DE3, the contractor’s contract works policy should respond.
Under DE4, the employer’s arranged policy should respond.
The dispute usually isn’t “whose policy” but whether:
the sum insured was adequate
the correct perils were included
the policy was in force and noted correctly
This is where DE3 vs DE4 becomes critical.
Under DE3, the contractor may not have existing structures cover (or it may be limited).
Under DE4, the employer’s property policy may cover the existing building—but only if works are declared and endorsed.
This is where the non-negligence requirement may come into play.
Public liability may respond if negligence is proven.
Non-negligence insurance may respond even without negligence (subject to conditions).
In practice, that’s how these are commonly used, but you must check the exact JCT form/edition and the insurance schedule in your contract documents.
Yes. Contract works insurance covers physical damage to the works; public liability covers third-party injury/property damage.
Usually it covers resulting damage, but not the cost of rectifying the defective part itself. Wording varies, so always check the policy.
Only where there is design responsibility or where the contract particulars specify PI. If you’re doing design (even temporary works design), PI should be discussed early.
Misalignment between what the contract requires and what the policy actually provides—especially around existing structures, joint names, and non-negligence cover.
JCT insurance requirements are designed to reduce disputes, but only if they’re implemented properly.
As a rule of thumb:
DE3 tends to suit straightforward projects where the contractor can insure the works under their annual CAR programme.
DE4 tends to suit projects involving existing buildings, funder/landlord requirements, or where the employer wants central control of the material damage cover.
Either way, the winning move is the same: confirm responsibilities early, align the contract particulars with real insurance wordings, and document everything before you start on site.
If you want, I can help you sanity-check your JCT insurance schedule (DE3/DE4), spot gaps, and outline what a compliant insurance pack should include for your project type.
Quick question: is your audience mainly contractors (SME builders) or employers/developers (clients and property owners)? That will help me tailor the examples and the CTA.
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