Injury, Damage and Insurance (Section 6)

Question 1

What does indemnify mean?

Answer 1

Indemnity is a contractual obligation of one party (indemnitor) to compensate the loss occurred to the other party.

Question 2

What insurances have you come across on a project you have worked on?

Answer 2

1. ) Employers / contractors liability,
2. ) Public liability,
3. ) Professional indemnity insurance,
4. ) Non-negligence insurance,
5. ) The Works “all risks” insurance

Question 3

What is employers liability?

Answer 3

This insurance protects the employer/contractor against death, disease and injury to their employees.

Question 4

What is public liability?

Answer 4

This insurance projects the employer / contractor against 3rd party injuries or death (members of the public).

Question 5

What is non-negligence insurance?

Answer 5

This protects the employer against damage to adjacent properties from things like heave and subsidence.

Question 6

What does professional indemnity (PI) insurance cover?

Answer 6

Professional negligence.

Question 7

What are the levels of indemnity for PII?

Answer 7

The levels of indemnity are based on turnover: £100,000 or under = £250k,
£100,001 - 200,000 = £500k,
£200,001 and over = £1mill

Question 8

Who produces PI thresholds?

Answer 8

RICS*.

*RICS Professional Indemnity Requirements - Version 7 (May 2020)

Question 9

What does ‘in the aggregate’ mean and what are the implications? (compared to claims made)

Answer 9

“In the aggregate” means that the total cover for the year is £X.

Compared to “claims made” which means each and every claim gives you the maximum amount of cover.

Question 10

What is run off cover?

Answer 10

Run off cover is required to cover the statute of limitations (12 years for a deed and 6 years for under hand)

Run-off coveris aformof professionalindemnityinsurancethat applies when abusiness, or individual stopsoperatingin a particular field. This might be because thebusinesshas been sold, it has changed direction, it has gone into administration, an individual has retired, etc.

Question 11

What do the Contract Works insurance cover?

Answer 11

The Works Insurance covers damage to works and materials.

Question 12

What must this insurance cover?

Answer 12

Contract Works insurance is also known as “all-risks insurance” as it must cover all construction risks and is commonly issued under joint names of the Contractor and the Employer.

Question 13

What are the Works “all risks” A, B and C?

Answer 13

Option A - New build, All Risks insurance taken out by Contractor.

Option B - New build, All Risks insurance taken out by the Employer.

Option C - Existing Structure (Refurbishment, maintenance and extensions) taken out by the Employer.

Question 14

What is not covered under the Works “all risks” insurance?

Answer 14

Defective work (due to wear and tear, deterioration (rust), etc.), defects in design (specification or workmanship), war, expected risks (radiation, terrorism, etc.).

Question 15

What are Specified Perils?

Answer 15

Specified perils tend to be significant events that would cause very significant damage, such as fire, explosions, earthquakes, flooding - but excluding Expected Risks e.g. radiation.

Note that sub-contractors are covered under the Works insurance policies (A, B or C) for Specified Perils i.e. the insurers waive the right of subrogation.

Question 16

What is subrogation?

Answer 16

Subrogation allows an insurer to recover the amount it has paid for a loss by suing the party that caused the loss. Joint names prevents subrogation.

Question 17

What is the Joint Fire Code?

Answer 17

Set of standards and procedures published by the Fire Protection Association to provide guidance on fire safety on site and well as the prevention and detection of fire. Most recent publication is the 9th edition, which was published in 2015 which included guidance on the installation of PV’s and automatic fire detection on large timber frame structures.

Question 18

Explain the role of a loss adjuster?

Answer 18

An insurance agent who assesses the amount of compensation that should be paid after a person has claimed on their insurance policy.

Question 19

Explain how you have checked that a contractor’s insurances were in place on one of your projects and say what you were looking for?

Answer 19

These can be asked for during the PQQ and you are looking for the limit of liability and the dates of the policy.

Question 20

Explain how an insurance claim was dealt with on one of your projects?

Answer 20

1. ) Contractor notifies C.A,
2. ) Value of non-damaged works taken,
3. ) Insurer to inspect works,
4. ) Contractor to repair and replace,
5. ) Contractor paid for repair and replacement in interim cert,
6. ) Payment to who depends on which Option was taken out.