Management Consulting
Aon
Full Credential Description
The Building Safety Act 2022, which gained Royal Assent in April 2022 and will be fully enforced by October 2023, presents significant challenges for building owners, developers, and contractors. One of the primary issues is the introduction of direct claims against manufacturers and suppliers of defective construction products. This change allows claims to be made even when there is no direct contractual relationship, which is a departure from previous legislation. This is particularly crucial in an economic climate where contractors may go into receivership, enabling aggrieved parties to pursue claims directly from manufacturers or other parties in the supply chain. Additionally, the Act extends the limitation period for claims related to defective premises from six years to 15 years for new work and introduces a 30-year retrospective liability for cladding products completed before June 28, 2022. This significant increase in the limitation period raises concerns about the potential for unfair trials under the Human Rights Act due to the lapse of time. Furthermore, the Act introduces a new head of damages for economic loss when a dwelling becomes unfit for habitation, creating potential gaps in insurance coverage. In response to these challenges, public sector organizations are advised to review their risk mitigation strategies. This includes maintaining comprehensive records of all parties involved in construction projects, not just the main contractors, to ensure greater protection and remedy options if a party goes out of business. Local authorities are also encouraged to ensure adequate insurance coverage for facility management companies and consider DirectorsÂ’ and OfficersÂ’ insurance to protect managers and senior employees from personal liability under the Act. The introduction of longer limitation periods necessitates a review of historical claims and construction contracts to assess potential impacts. Organizations should establish a risk register to document additional exposures due to the retroactive limitation period and ensure that contractors hold appropriate liability insurance for the required duration. Engaging with brokers and insurers early is essential to understand the implications of the Building Safety Act 2022 and to adjust coverage and risk strategies accordingly.