A man whose home was destroyed by fire claimed under his insurance policy. The policy gave the insurer the right to reinstate the property rather than to pay a cash sum to the insured. The insurer opted to undertake reinstatement and required the insured to enter a standard form JCT Minor Building Works (1998) contract with a builder.
The builder’s performance was not satisfactory to the homeowner and he therefore withheld progress payments that were due to the builder under the contract. The builder then sought an adjudication (as provided for in the contract terms) to confirm his entitlement to the payments. The adjudicator ruled in favour of the builder and the homeowner appealed the decision. The Technology and Construction Court overturned the decision on the basis that the contract had been imposed on the man by the insurer and the wording of the withholding clause was unfair under consumer law.
This case will give comfort to home owners who have damage to their property covered by an insurance policy and who then find that the insurer takes it upon itself to deal with the repairs directly. The Courts will protect them if the way this operates turns out to be unfair.
