The Site Waste Management Regulations, which oblige contractors planning construction works worth over £300,000 to produce Site Waste Management Plans, came into force on 6 April 2008, as part of the government's drive to reduce construction waste.

Implications For Insurers

The government has suggested that the Regulations may lead to cost savings on works. Insurers might reasonably expect that they might see some benefit in these circumstances. Normally, insurers meet the cost of reinstatement works on an "as incurred" basis, with the result that costs savings achieved can usually be captured either in the adjustment or in the certification process.  This is, of course, more difficult if a fixed cost contract is entered into.

However, initially at least, the prospect of costs savings may be more government PR than reality.  Usually, increasing regulation in this way has the effect of increasing up-front construction costs.  If this turns out to be the case, construction values may well be increased beyond those declared to insurers. In such cases, insurers may be able to charge an additional premium or, given the right expression in the policy, apply average.  The effect of the Regulations may also be to trigger policy provisions that provide cover up to a limit in respect of enhanced costs resulting from changes in legislation.

Overall, the Regulations are likely to feature as a factor in adjusters' adjustment and negotiation of losses but are unlikely to trigger any fundamental change in approach or exposure for insurers.

For more detail on the regulations click on both links below:

Site Waste Management 04/04/08,  Site Waste Management of 11/02/08

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 14/05/2008.