Introduction

The Building Safety Regulator regime has introduced a structural shift in how construction activity is authorised, controlled, and evidenced on higher-risk buildings in London. While much industry discussion has focused on compliance, approvals, and programme delay, a second-order impact is now becoming unavoidable: construction insurance risk is no longer detached from regulatory permission.

This guidance is written for insurers, underwriters and brokers who insure the built environment, from concept to asset and who now need to understand how BSR Gateways reshape lawful construction activity, coverage certainty, and claims defensibility on London projects.

From 2026, the Building Safety Regulator is no longer a post-completion control affecting only compliance outcomes, it is an active statutory gatekeeper whose approvals determine whether construction activity on higher-risk buildings is lawful at all. Where work proceeds outside an approved Gateway scope, that activity may constitute unauthorised construction, introducing regulatory, contractual and insurance coverage risk. For insurers, this marks a structural shift: policy response can no longer be assessed solely against workmanship, negligence, or damage, but must also consider whether the insured activity was legally permitted at the time it was undertaken.

1. Why BSR is no longer background regulation for insurers

Historically, construction insurance has treated regulatory compliance as a secondary condition, relevant after loss, but rarely determinative of cover validity itself. The BSR regime breaks that assumption.

Gateway approvals now:

• define what construction may legally proceed
• constrain timing, scope, and sequencing
• introduce a binary condition: approved or not approved

For insurers, this means regulatory status is no longer peripheral, it becomes part of the risk substrate against which exposure exists.

2. Authorised vs unauthorised construction: the new insurance fault line

One of the most persistent misconceptions on London sites is that construction may continue at risk while approvals are pending. Under the BSR regime, this distinction matters far less than many assume.

If construction activity falls outside an approved Gateway scope, or proceeds before approval is granted, or deviates materially from the authorised design or construction control plan, then that activity may be classified as unauthorised construction.

From an insurance perspective, this introduces uncertainty over lawful activity, difficulty establishing insured operations and downstream exposure in the event of enforcement, remediation, or occupation refusal.

Critically, this risk exists even where no physical defect or incident has occurred.

3. Where traditional construction policies are now exposed

BSR does not rewrite insurance contracts, but it changes the conditions under which insured activity exists.

Key exposure zones now include:

Public Liability

Claims linked to activity later deemed unauthorised may raise questions over whether liability arose from an insured operation at all.

Contractors All Risks (CAR)

Damage occurring during non-authorised works introduces disputes over policy trigger and insurable interest.

Professional Indemnity (PI)

Design or advisory services that facilitate out-of-scope construction may attract regulatory scrutiny beyond negligence standards.

Latent Defects Insurance (LDI)

Where construction legality is questioned, the integrity of long-term defect cover assumptions is challenged.

Non-damage regulatory exposure

Enforcement, stop notices, or occupation refusal now represent real financial risk without traditional damage events.

BSR effectively introduces a new class of non-physical construction risk that insurers must acknowledge.

4. London as the stress-test market for insurers

London is not an average test case, it is where BSR risk surfaces first.

Contributing factors include:

• the highest concentration of HRBs in England
• complex phased developments
• intense programme pressure
• frequent design evolution post-planning
• heightened investor, funder and occupier scrutiny

In London, partial approvals, staged occupation strategies and programme acceleration attempts are common, precisely the conditions under which scope drift and unauthorised activity risk increases.

For insurers operating in the capital, BSR is not a future issue, it is a current underwriting reality.

5. What insurers and brokers should now be verifying

To mitigate avoidable exposure, insurers and brokers should be asking questions that previously sat outside traditional insurance due diligence.

At a minimum:

• Has Gateway 2 approval been formally granted for the works currently underway?
• Is on-site construction strictly aligned to the approved scope?
• How are design changes assessed against Gateway conditions?
• What controls prevent premature or parallel construction activity?
• How is Golden Thread evidence governed, timestamped and retained?
• Who holds responsibility for confirming regulatory alignment on site?

These are not legal questions, they are risk verification questions.

6. Why this creates a value shift for specialist brokers

The BSR regime does not reduce the need for insurance, it raises the standard required to place it responsibly.

Brokers who understand regulatory sequencing, recognise lawful activity boundaries, translate BSR constraints into insurance risk language are better positioned to protect clients from silent exposure, reduce post-loss disputes and maintain insurer confidence in complex schemes.

This is not about selling additional cover, it is about preventing coverage from becoming ambiguous when it matters most.

Conclusion – Insurance can no longer sit outside the BSR system

The Building Safety Regulator has redefined the relationship between construction activity and legality on higher-risk buildings. For insurers and brokers operating in London, this means construction risk can no longer be evaluated independently of regulatory permission.

Where work is authorised, insurance functions as expected. Where work is unauthorised, uncertainty enters, regardless of intent, competence, or outcome.

In 2026 and beyond, understanding BSR is not optional for construction insurance professionals, it is a prerequisite for insuring the built environment with confidence.

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Expert Verification & Authorship: Mihai Chelmus Founder, London Construction Magazine | Construction Testing & Investigation Specialist