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HOME BUILDING REGULATION 2014 - REG 42
Limitations on liability and cover
42 Limitations on liability and cover
(1) An insurance contract may contain the following limitations on liability
under the contract-- (a) the contract may limit claims that may otherwise
arise under the building contract in the nature of liquidated damages for
delay or damages for delay provided that any such limitation must not extend
to any increase in rectification costs caused by the effluxion of time,
(b)
the contract may exclude a claim for such loss or damage as could be
reasonably expected to result from fair wear and tear of the building work
covered by the contract or failure by the beneficiary to maintain the building
work,
(c) the contract may exclude a claim in relation to a defect in, or the
repair of damage to, major elements in the non-residential part of a building
that supports or gives access to the residential part, unless it is a defect
or damage that adversely affects the structure of the residential part or the
access to it,
(d) the contract may exclude a claim in relation to damage
caused by the normal drying out of the building work, if the damage has
occurred despite the contractor taking all reasonable precautions in allowing
for the normal drying out when carrying out the building work,
(e) the
contract may exclude a claim in relation to damage due to, or made worse by,
the failure of any beneficiary to take reasonable and timely action to
minimise the damage,
(f) the contract may exclude a claim in relation to an
appliance or apparatus (such as a dishwasher or air-conditioning unit) if the
claim is made after the expiry of the manufacturer's warranty period for the
appliance or apparatus or, if there is no warranty period, outside the
reasonable lifetime of the appliance or apparatus,
(g) the contract may
exclude a claim in relation to damage to work or materials that is made
outside the reasonable lifetime of the work or materials or the manufacturer's
warranty period for the materials,
(h) the contract may exclude a claim in
relation to a defect due to a faulty design provided by a beneficiary or a
previous owner,
(i) the contract may limit liability resulting from
non-completion of building work to an amount that is not less than 20% of the
contract price (including any agreed variation to the contract price) for the
work,
(j) the contract may exclude liability for work that is not residential
building work or is not work that is required to be covered by a certificate
of insurance under Part 6 of the Act (or both), regardless of whether a valid
insurance certificate has been issued.
(2) In addition, an insurance contract
may exclude a claim for loss or damage resulting from any of the following if
the exclusion is a standard policy provision of the insurer and the exclusion
is not inconsistent with this Regulation and does not contravene this
Regulation-- (a) war,
(b) an act of terrorism,
(c) civil unrest,
(d)
asbestos contamination or removal,
(e) a nuclear event,
(f) risks normally
insured under a policy for public liability or contract works,
(g) an act of
God or nature,
(h) failure by the beneficiary to maintain appropriate
protection against pest infestation or exposure of natural timbers,
(i)
consequential loss, including, without limitation, loss of rent or other
income, loss of enjoyment, loss of business opportunity, inconvenience or
distress,
(j) malfunction in any mechanical or electrical equipment or
appliance, if the insurer proves that the malfunction is not attributable to
the workmanship of, or installation by, the contractor.
(3) An
insurance contract may contain any other limitation on liability, but only if
it is not inconsistent with this Regulation and does not contravene any
requirement of this Regulation.
(4) For the purposes of this clause, an
"act of terrorism" is an act that, having regard to the nature of the act, and
the context in which the act was done, it is reasonable to characterise as an
act of terrorism.
(5) Any lawful activity or any industrial action cannot be
characterised as an act of terrorism for the purposes of this clause. An act
can only be so characterised if it-- (a) causes or threatens to cause death,
personal injury or damage to property, and
(b) is designed to influence a
government or to intimidate the public or a section of the public, and
(c) is
carried out for the purpose of advancing a political, religious, ideological,
ethnic or similar cause.
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