An urban site almost never runs on empty ground. It fits into a building being kept, leans on party walls, digs a few meters from foundations it did not build, and works under occupied apartments. Construction policies, however, are written for the works under construction, that is, for what does not yet exist. Everything that existed before comes under other texts, often other contracts, and sometimes none. That boundary between the new and the old produces more uncovered losses in urban settings than any other, and it is crossed by literally one meter.
Three categories that ordinary conversation blends must be separated. The owner's existing property first: the retained part of a building being refurbished, belonging to the party doing the building, and which is not the works under construction. Third-party property next: the neighboring building, its cellar, its yard, belonging to somebody else. Party structures last, which belong to both and whose status follows a regime of its own. Each calls for a different answer, and the first is the most often forgotten, because it bears on property the owner already holds and for which it believes itself covered by its usual policy.
It generally is not, or no longer is. An owner's property policy covers a building in use, and most such contracts withdraw, sub-limit or require a declaration as soon as works of any scale are undertaken in it. The insurer's reasoning is coherent: a building whose internal walls are being demolished is no longer the building it rated. The project owner then finds itself with an asset it believes doubly insured, by its property policy and by the construction policy, and which is in fact insured by neither, one having withdrawn and the other having never covered it.
The construction policy does offer an extension for existing property, and how it reads must be known. It generally responds for damage caused to existing property by the execution of the works, which excludes damage of an origin foreign to the site: a fire from next door or water from another floor does not come under it. It almost always carries a sub-limit far below the value of the retained building, because the amount was set by reference to the cost of the works and not to the value of what exists. And it often requires a prior joint condition survey, without which showing that the crack is new becomes impossible. Those three conditions stack, and the third is discovered at the moment it is needed.
On the third-party side, French law adds a mechanism that must be known because it shifts the discussion entirely: abnormal neighborhood disturbance. It allows the neighbor to obtain compensation without showing any fault, the abnormality of the disturbance alone being enough, and it applies to the project owner as much as to the contractors. The practical consequence is that all the debates about good practice, about the compliance of the method, about the unforeseeability of the ground, which would fill a classic liability dispute, become beside the point. The neighbor whose wall cracks does not have to prove that the work was done badly, it need only prove that its crack comes from the site.
That no-fault liability then meets an insurance difficulty, and it is structural. A liability policy is designed to cover fault, and many wordings reason in terms of liability incurred, which includes this one, but some exclude or sub-limit damage to adjoining property, precisely because its frequency is high and its cause often undetermined. The combination is a bad one: a regime that makes the award near automatic, and a cover that withdraws where the regime bites. That is the point of the file to be checked before opening an excavation, never after.
That leaves the question of proof, which decides these files more surely than the law does. A crack on an old building is almost always a crack that already existed, at least in part, and the age of the fabric works against whoever claims it is new. A preventive court survey, the procedure by which an expert appointed before works start records the condition of adjoining properties and installs tell-tales, therefore turns an unverifiable argument into a comparison of two dated records. It costs little, it is applied for before the site opens, and it cannot be caught up: once the excavation is open, the prior condition can no longer be established by anyone, and the party asserting is the party that loses.
A scheme refurbishes an 1890 building, keeping the facades and the first floor, and digs two basement levels. The construction policy carries an existing property extension sub-limited to 1.5 million euros for damage caused by the execution of the works, conditional on a joint condition survey, which was not carried out. No preventive court survey was applied for. The owner's property policy withdrew when the site opened, as its contract provides. In the eighth month, dewatering causes settlement: the retained facade cracks across three bays, and so does the adjoining building. Repairs are assessed at 2.1 million for the facade and 900,000 euros at the neighbor's, who sues. Where does this stand?
Three lines, three regimes, and only one is in good shape. At the neighbor's, abnormal neighborhood disturbance applies: it does not have to prove fault, only the link between its crack and the site, which dewatering settlement establishes without difficulty. Its 900,000 euros will therefore be owed, and the only question is whether the liability policy covers them or sub-limits adjoining property, which is checked in the contract and not in the claim file. The retained facade is in far worse shape, and that is where the file is lost. It is not the works under construction, the property policy withdrew, and the existing property extension is doubly out of reach: sub-limited to 1.5 million against 2.1 of damage, and above all conditional on a condition survey that does not exist. On an 1890 building nobody will be able to establish that the cracks across the three bays post-date the works, and the burden of that showing falls on the party claiming. The non-obvious point is that those two omissions, the condition survey and the preventive court survey, are not forgotten administrative formalities: they are the only two documents that would have manufactured the proof, they are applied for before the site opens, and their combined cost bears no relation to the two million they would have secured.
- 01A construction policy covers what does not yet exist: the owner's existing property, third-party property and party structures come under three distinct regimes.
- 02The owner's property policy withdraws or sub-limits as soon as substantial works open: the retained building ends up between two contracts, insured by neither.
- 03The existing property extension covers only damage caused by the execution of the works, carries a sub-limit set on the cost of the works rather than the value of the fabric, and often requires a condition survey.
- 04Abnormal neighborhood disturbance relieves the neighbor of proving fault: the whole debate about good practice becomes beside the point, and some liability policies withdraw where that regime bites.
- 05On old fabric, the age of a crack can no longer be established once the excavation is open: the condition survey and the preventive court survey manufacture the proof, and are applied for beforehand.