黑洞社区

The man who said, 鈥淵ou can鈥檛 insure against anything that may happen to you,鈥� clearly hadn鈥檛 read a building contract. There is a proliferation of insurance policies required. The skill for a subcontractor is being able to establish and plug the areas where he is exposed to risk.

The insurance provisions of the Joint Contracts Tribunal (JCT) 2005 contracts are essentially the same as in the 1998 edition. Any section references below relate either to JCT 2005, conditions in the Standard 黑洞社区 Contract, SBC/Q or Standard 黑洞社区 Subcontract (SBCSub/C).

Amendments to the standard forms may shift responsibility to insure to another party, possibly increasing the subcontractor鈥檚 risk.

Joint-names all-risks

A subcontractor should already have the benefit from cover provided by a Joint Names policy taken out in the names of the employer and contractor.

This is a requirement of the contract. Cover is restricted to loss or damage incurred to the works and site materials by these specified perils: 鈥渇ire, lightning, explosion, storm, tempest, flood, escape of water from any water tank, apparatus and pipes, earthquake, aircraft and any other aerial devices or articles dropped therefrom, riot and civil commotion鈥�.

A subcontractor need not insure against the specified perils when Section 6.6 of the subcontract applies. The Joint Names policy is taken out either by the contractor for option A (new-build), the employer for option B (new-build) or the employer for option C (existing structures).

There is a contractual requirement for the contractor to provide documentary evidence to the subcontractor that the insurance obligations have been complied with.

The subcontractor may request the documentation and, in the event that evidence is not produced, the subcontractor may take out insurance against the specified perils himself and claim the costs incurred from the contractor. A local authority employer need only provide a certificate confirming that terrorism cover is in place.

Contractors鈥� all-risks

There are considerable areas of risk remaining that are not covered by the Joint Names policy. Therefore, for their own protection, subcontractors would be advised to take out a CAR (Contractors鈥� All-Risks) policy, tailored to include:

Fire, lightning, explosion, storm, tempest, flood, water, earthquake, aircraft, riot, civil commotion

• damage to the subcontract works due to the negligence of the subcontractor or their employees, etc;
• damage to the subcontractor鈥檚 materials and goods stored on site. The contractor is responsible for materials 鈥渇ully, finally and properly incorporated into the main contract works鈥�, but this is open to differing interpretations;
• damage to the subcontractor鈥檚 plant, tools, equipment and hired items while on site.

A claim against the subcontractor鈥檚 insurance for damage to the above need not be made when damage occurs due to excepted risks.

Professional indemnity insurance

This form of policy will protect the subcontractor against the consequence of errors made during the performance of professional activities.

Subcontractors responsible for design must obtain professional indemnity insurance (PII) cover. There is a contractual requirement for the subcontractor to hold PII in the JCT 2005 subcontracts when a subcontractor鈥檚 design is required. Collateral warranties between the subcontractor and employer or other parties also require PII.

As professional activities cover a broad base, the subcontractor must ensure the activities defined in their policy adequately cover liabilities.

The limit of indemnity and the period that the cover must remain in force (often 12 years after practical completion) required by the contract or warranty must be provided under the policy.

It is necessary to maintain the insurance long after the work is completed as insurers will not honour claims after the policy has expired, regardless of when the work was carried out.

It is advisable to provide insurers with the details and discuss the requirements of each contract, which requires PII before commitment.

Product liability insurance

Unlike PII, this form of policy does not cover the cost of replacing or repairing defective equipment but covers the legal liability for accidental death or injury to third parties, and accidental loss or damage to property occurring due to the defective equipment.

Such a policy may be a requirement of a construction contract or collateral warranty where a contractor is providing proprietary products and does not design to the same degree as an electrical or mechanical contractor 鈥� for example, lifts, curtain walling and windows.