Alterations and Repairs Clause
The alterations and repairs clause confirms that ongoing alteration, repair or extension works on the insured building do not automatically prejudice cover, provided certain limits (such as project value or construction method) are observed.
- Clause type
- Condition
- Origin/Market
- International programme
- Favours
- Insured
- Negotiability
- Negotiable
Purpose
Property policy conditions frequently restrict, or impose notification duties for, alterations, repairs or extensions to insured buildings, since such works can increase risk (for example, fire or water damage exposure). The alterations and repairs clause creates a framework within which ordinary construction and repair works may be carried out without separate notice to, or consent from, the insurer, without jeopardising cover.
Effect and limits
The clause typically permits alteration, extension and repair works up to a project-value or annual limit specified in the wording, provided the works are carried out using standard, non-combustible or fire-resistant materials and methods and do not involve demolition, blasting or removal of load-bearing elements or comparable interventions. Where works exceed these limits, prior notification, or even a separate construction all risks policy, is often required; otherwise cover for the affected area may be restricted.
Negotiation and practice
When negotiating the clause, the project-value limit in particular should be aligned with the policyholder’s actual maintenance and investment activity, since standard limits are often too low for larger property portfolios. A clear delineation from construction all risks (contractors’ all risks) cover is also advisable, so that no gap in cover arises between the two policies during larger new-build projects.