Insurance Flashcards
What is insurance?
A risk spreading mechanism
What are the two main types of insurance?
Liability and loss insurance
What is liability insurance?
Financial cover for the legal liabilities that the insured party owes to others
What is loss insurance?
Financial cover for losses that fall directly on the insured party
What is subrogation?
Legal technique where the insurer steps into the shoes of the insured in order to take the benefit of any legal rights or remedies they may have against a third party responsible for the loss - lets the insurer recover damages
Waiver of subrogation rights removes this right from an insurer.
What is a composite (joint names) insurance policy?
It is where multiple parties can be signed onto an insurance policy, allows the client to claim the benefits of a claim should a contractor terminate the principle contract
Check this answer
What section of the JCT is titled, Injury, Damage and Insurance
Section 6
How do you know how big an insurance policy needs to be against a contract?
It will state the minimum requirment in the contract particulars
Who is liable for claims larger than what a insurance policy covers?
Whoever owns it. e.g. option a JCT it would be contractor
In JCT, what happens if the contractor doesn’t actually take out a required insurance policy?
They are in breach. Client can ask for a copy of policy and they need to show evidence in 7 days. If they dont then the client can assume the cover hasnt been provided and the client can take it out themselves, recovering these costs later on regardless of weather the contractor can provide they had it all along.
Regarding insurances, what are some excepted risks in JCT?
- Radiation
- Pressure waves caused by aerial devices travelling at sonic or supersonic speeds
Does the contractor have to indemnify the employer or insure against Excepted Risks?
Nope
How many insurance options are there in JCT
3
What are the insurance options in JCT
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
What is the JCT insurance option A
- 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
What is the JCT insurance option B
- 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
What is the difference between JCT insurance options A & B?
Who takes out the policy, Contractor (A) or Client (B)
What is the JCT insurance option C
- 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
What is the procedure if loss or damage occurs as a result of an insured risk?
I have no idea - why does rics not have guidence :(
What is terrorism cover?
Insurance provided in joint names for physical loss or damage to work executed, site materials, existing structures and their contents caused by terrorism
What is the joint fire code?
Sets out a series of standards and procedures to be followed to minimise the occurrence of accidental or malicious fires
What are the objectives of the joint fire code?
To reduce the incidence of fires in construction realted work. By designing out, taking simple precautions and adopting safe working practices it argues that the majority of fires can be prevented
Who often requires the joint fire codes inclusion in a contract?
The Insurer
When would the joint fire code apply to a project?
If the contract value is over £2.5m, although the insurer can require it to apply to smaller projects
What is a large project in relevance to the joint fire code?
A project over £20m, or a smaller project if required by the insurers
Who decides if a project is a large project under the joint fire code?
Purley at the Insurers descretion, £20million an automatic trigger but can be lower.
What must the contractor provide if the joint fire code applies?
Handbells, whistles, portable fire extinguishers, fire doors, fire stopping to voids and lift shafts etc.
Also fire marshals if a large project
Who ensures compliance to the joint fire code?
Contractor and clinet responable for their respective poeple - otherwise will be breach of principle contract if the contractor doesnt fix within 7 days the client can employ others to carry out remedial and charge that to the contractor.
Otherwise the insurance policy could be void
Who bears the cost of amendments to the joint fire code after the base date?
- Whoever is stated in the contract particulars
- If it is the employer, the cost should be added to the contract sum
