Insurance

Question 1

What are the two main types of insurance?

Answer 1

• Liability and loss insurance

Question 2

What is liability insurance?

Answer 2

• Financial cover for the legal liabilities that the insured party owes to others

Question 3

What is loss insurance?

Answer 3

• Financial cover for losses that fall directly on the insured party

Question 4

What does ‘joint names’ mean?

Answer 4

• Where the employer and contractor (and sub contractors etc) are insured under the same policy
• It stops the insurer having the right of subrogation against the other party if they caused loss

Question 5

What types of insurance are required under JCT?

Answer 5

Injury, death, damage to people or property that is not the Works

• Insurance must also be taken out to cover damage to the Works

Question 6

If the contractor fails to take out the insurance, what can the Employer do?

Answer 6

• The contractor has to provide documentary evidence that the insurance has been taken out and the amount of premiums if requested
• If they haven’t taken out the insurance the employer can take out insurance to cover their liabilities and charge the contractor the premium

Question 7

What are the options for insuring the works and where is each appropriate?

Answer 7

• There are three insurance options under JCT, given in detail in Schedule 3
• Option A – insurance of new works by the contractor
• Option B – insurance of new works by the employer
• Option C – insurance of works to an existing structure by the employer

Question 8

Describe Insurance Option A?

Answer 8

• For new works
• The contractor takes out the insurance policy
• It is in joint names
• It should be maintained under PC
• The contractor will only receive the value paid out by the insurers for reinstatement, if the cost is greater than that they bear the loss

Question 9

Describe Insurance Option B?

Answer 9

• For new works
• The employer takes out the policy in joint names
• It may be used by frequent developers who may have a lower premium than the contractor
• Any reinstatement works are treated as a variation, and the employer has to pay the actual value, if that is more than the insurance policy they bear the loss

Question 10

Describe insurance option C?

Answer 10

• For works to existing structures
• Taken out by the employer in joint names
• The new works have to be insured for all risks and specified perils
• The existing structure only has to be insured for specified perils

Question 11

• What is a large project?
• Who decides if it is a large project?
• Where is this stated?

Answer 11

• A project over £20m, or a smaller project if required by the insurers
• The insurance company
• It is stated in the contract particulars if the code applies and if the project is a large project

Question 12

On Belvedere house, what did the reinstatement value include?

Answer 12

• Cost of demolishing and cleaning away the existing building and rebuilding the existing design in modern materials using modern techniques to a standard equal to the existing property and in accordance with current building regulations and statutory requirements.

Question 13

What should the value of a fire insurance valuation be?

Answer 13

• The reinstatement value

Question 14

What is your organisations Insurance policies?

Answer 14

• £20m PII cover (per year) any on claim and in the aggregate
• £5m cover per year for Fire safety works

Question 15

What is Professional Indemnity Insurance?

Answer 15

• Provides cover for claims of negligence
• Used for professional services
• Covers the costs of defending claims
• Need run off cover for 6 years
• Claims can be made up to 15 years

Question 16

What is run off cover?

Answer 16

• A type of liability built into the professional indemnity insurance to cover services provided in the past
• if contract executed under hand - 6 years cover
• if executed as a deed - 12 years cover