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TYPES OF INSURANCE
The insurance requirement for every project is unique. There is no single insurance product or set of insurance policies that can meet everyone’s unique needs and requirements. The following is a list of commonly available and generally necessary insurances, accompanied by a brief description of their basic purpose. Insurances for construction-related projects need the experienced advice and guidance of a competent insurance broker or consultant advisor. The nuances of insurance contracts are too many and varied for anyone to take the risk of arranging insurances without competent advice. This is even more important in the case of insurances for projects involving mass timber construction because the insurance industry has yet to design insurance contracts specifically for mass timber, in light of the new and, to some extent, unknown risks that it will present. Contractors all risk insurance/contract works insurance (annual or single project) A key critical policy that covers the ‘Client’ and Contractor/s against ‘All Risks’ (as defined), including: Contract Works; Owned Plant and Machinery; Hired In Plant; Business Interruption; Public & Employers’ Liability; Contractors JCT 6.5.1 (collapse & subsidence etc) (other extensions to cover may be available form some insurers). Combined/contents/office building insurance Covers the property and business interests of the Business owner. Physical loss or damage; Public and Employers’ liabilities, Business interruption; Loss of rent and other relevant covers, by arrangement with insurer. Professional indemnity insurance Essential cover for all providers of professional / subcontractor services. Covers the legal liability of the
individual firm for negligence and / or negligent breach of contract. Clients and contractors should ensure it is held and maintained by every relevant party for the duration of the project and six years beyond. PI insurance only covers claims MADE during the period of the policy. Public liability insurance Essential insurance and always required of business owners and contractors to provide cover against liability for personal injury or death, or loss or damage to property of third parties who may come into or near the site. Public liability insurance and Employers’ liability insurance are usually offered in a single policy. Directors’ and officers insurance Covers the legal liability of the company’s directors and officers (as defined) arising from ‘Wrongful Acts’ (as defined). Essentially, failing to meet their statutory obligations as a shadow director, or officer of a company. Essential protection for the personal liability of the directors and officers and must cover them in case of insolvency/administration, etc. Collateral warranty A collateral warranty acts as a legally binding bridge between parties in a project that do not have a direct relationship with each other. Eg principal contractor, sub- contractor/s consultant/s, funder, purchaser or tenant. The warranty enables the third party to enforce certain rights or obligations otherwise not available to them directly against the party providing the collateral warranty, providing an additional layer of protection and assurance in complex contractual arrangements. It is a complex matrix of obligations that should be reinforced by the relevant (typically the PI and PL) insurances.
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APPENDICES
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