Insurances / Protection

Question 1

What can you do to protect your client in construction?

Answer 1

PCG
Bonds
CW
Third Party Rights
Payment security - escrow accounts

Question 2

What types of bonds are there (not for different uses!)

Answer 2

• On demand
• Conditional

Question 3

What are bonds?

Answer 3

Undertakings given by one party to another to pay money if a third party defaults

Question 4

What is a guarantee?

Answer 4

Seeks to create a primary obligation so the guarantor is equally liable with the contractor so the beneficiary of the guarantee may look to either to perform the primary obligation

Question 5

What do bonds and guarantees do?

Answer 5

Provide client with a form of financial recourse in the event of risks occuring

Question 6

What provisions are in a bond?

Answer 6

Depends on bond but usually:
- Sets out conditions
- Procedures to follow
- Expiry date

Question 7

What provisions in a PCG?

Answer 7

• ‘No greater liability’ provision - so does not exceed original contract
• Expiry date
• Dispute resolution procedure

Question 8

What information is available on insurances / bonds?

Answer 8

RICS GN Construction Security and Performance documents 2013
Old but gives guidance on what to consider

Question 9

What is all risk insurance?

Answer 9

Refers to insurance that covers building works as they are progressed
Option C covers existing building structures from specified perils used during refurbishments or extensions

Question 10

What is joint name insurance?

Answer 10

insured parties are unable to claim against one another in respect of an insured loss, as they are considered to be one-and-the-same for the purposes of the insurance.
Only requires one insurance to be taken out