Latent defects insurance Covers new buildings (or new works to existing buildings) in the event that a latent defect (as defined) become apparent. Can provide useful indemnity against consequences of defects but cover is tightly defined, and claims can be complex and time consuming. Integrated projects insurance A novel and not yet ‘tried and tested’ concept intended to remove the ‘apportionment of blame - interparty Alliance’ claims that typically frustrate a claim against the principal contractor for liability arising from a subcontractor / professional. Not widely available. Not a proven concept. Legal expenses insurance Provides cover up to a specific limit of indemnity against the cost of pursuing or defending legal actions. Typically, includes contract disputes; Tax investigations; Criminal defence; Health & Safety investigations; Employment disputes. Cover varies between insurers and will only pay if prospects of success are at least 51%. Legal indemnity insurance Covers legal costs of Breach of covenant; Absence of easement; Absence of planning permission/building regulations; Rights of Light. Residual value insurance Protects against loss of asset value typically for Commercial Real Estate or Tools, Plant, Equipment Assures that a properly maintained asset will have a specified value at a future date. Helps to make asset risk counter-cyclical to inflation and with benefits including eg risk mitigation and capital optimization. Terrorism insurance Covers risks of loss arising from terrorist acts. Can be obtained on a ‘stand-alone’ basis or as an addition to a conventional buildings or commercial combined policy. Relevant for projects or buildings located in areas which may be considered as high-risk terrorist targets.
Performance bond A bond is not an insurance contract – it is a bond Commonly used to protect against the risk of a contractor failing to fulfil contractual obligations; eg through insolvency/ administration. A bond provides a guarantee (without proof of legal liability) up to the amount of the bond. Bonds can be issued either by an insurance company or bank. Miscellaneaous insurances The above is not an exhaustive or definitive list of insurances. If a business entity perceives a risk that it would like to transfer to a third party, and the said risk is not covered by the ordinarily available insurances, then the risk can be presented to Lignum Risk Partners for an assessment as to whether a bespoke insurance contract can be designed to meet the specific need and offered to the markets. The traditional insurance market is augmented by the Alternative Risk Transfer (ART) market, and this can give greater scope for transferring unusual or innovative risks.
This information is not and does not purport to be professional insurance advice.
No responsibility is or can be taken by the authors of this guide for reliance upon the insurance information.
It is highly recommended that professional insurance advice is taken from an advisor with expertise and experience appropriate to each class of insurance.
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