Insurance

Question 1

What is insurance?

Answer 1

A risk spreading mechanism

Question 2

What are the two main types of insurance?

Answer 2

Liability and loss insurance

Question 3

What is liability insurance?

Answer 3

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

Question 4

What is loss insurance?

Answer 4

Financial cover for losses that fall directly on the insured party

Question 5

What is subrogation?

Answer 5

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.

Question 6

What is a composite (joint names) insurance policy?

Answer 6

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

Question 7

What section of the JCT is titled, Injury, Damage and Insurance

Answer 7

Section 6

Question 8

How do you know how big an insurance policy needs to be against a contract?

Answer 8

It will state the minimum requirment in the contract particulars

Question 9

Who is liable for claims larger than what a insurance policy covers?

Answer 9

Whoever owns it. e.g. option a JCT it would be contractor

Question 10

In JCT, what happens if the contractor doesn’t actually take out a required insurance policy?

Answer 10

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.

Question 11

Regarding insurances, what are some excepted risks in JCT?

Answer 11

1. Radiation
2. Pressure waves caused by aerial devices travelling at sonic or supersonic speeds

Question 12

Does the contractor have to indemnify the employer or insure against Excepted Risks?

Answer 12

Nope

Question 13

How many insurance options are there in JCT

Answer 13

3

Question 14

What are the insurance options in JCT

Answer 14

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 15

What is the JCT insurance option A

Answer 15

• 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 16

What is the JCT insurance option B

Answer 16

• 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 17

What is the difference between JCT insurance options A & B?

Answer 17

Who takes out the policy, Contractor (A) or Client (B)

Question 18

What is the JCT insurance option C

Answer 18

• 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 19

What is the procedure if loss or damage occurs as a result of an insured risk?

Answer 19

I have no idea - why does rics not have guidence :(

Question 20

What is terrorism cover?

Answer 20

Insurance provided in joint names for physical loss or damage to work executed, site materials, existing structures and their contents caused by terrorism

Question 21

What is the joint fire code?

Answer 21

Sets out a series of standards and procedures to be followed to minimise the occurrence of accidental or malicious fires

Question 22

What are the objectives of the joint fire code?

Answer 22

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

Question 23

Who often requires the joint fire codes inclusion in a contract?

Answer 23

The Insurer

Question 24

When would the joint fire code apply to a project?

Answer 24

If the contract value is over £2.5m, although the insurer can require it to apply to smaller projects

Question 25

What is a large project in relevance to the joint fire code?

Answer 25

A project over £20m, or a smaller project if required by the insurers

Question 26

Who decides if a project is a large project under the joint fire code?

Answer 26

Purley at the Insurers descretion, £20million an automatic trigger but can be lower.

Question 27

What must the contractor provide if the joint fire code applies?

Answer 27

Handbells, whistles, portable fire extinguishers, fire doors, fire stopping to voids and lift shafts etc.

Also fire marshals if a large project

Question 28

Who ensures compliance to the joint fire code?

Answer 28

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

Question 29

Who bears the cost of amendments to the joint fire code after the base date?

Answer 29

• Whoever is stated in the contract particulars
• If it is the employer, the cost should be added to the contract sum