UNDERWRITING CRITERIA GENERAL INFORMATION - 1

1. UNDERWRITING CRITERIAGENERAL INFORMATION - 1 NAME OF PROPOSER; RELATIONSHIP OF PROPOSER TO PROJECT; IS THERE A CONTRACTUAL RESPONSIBILITY TO INCLUDE THE INTERESTS OF OTHER PARTIES? IF SO, NAME THESE PARTIES (SEE NEXT SLIDE); LOCATION OF CONTRACT SITE; DESCRIBE THE CONTRACT SITE TOPOGRAPHY; RESULTS OF ANY GEOTECHNIC AND HYDROLOGY INVESTIGATIONS CARRIED OUT NAME(S) OF ENGINEERS; DESCRIPTION OF PROJECT; COPIES OF PLANS, SPECIFICATIONS AND APPLICABLE CONTRACT DOCUMENT CLAUSES WOULD BE OF PARTICULAR VALUE TO UNDERWRITER; PARTICULARS OF ANY FREE-ISSUE MATERIALS TO BE PROVIDED TO THE CONTRACTOR AND VALUE THEREOF;

2. CONSTRUCTION HIERACHY

3. UNDERWRITING CRITERIAGENERAL INFORMATION - 2 IS THE PROJECT A TURNKEY PROJECT OR WILL IT BE TAKEN OVER IN SECTIONS WHEN COMPLETE; WILL THE PROJECT BE GIVEN TO ONE CONTRACTOR OR WILL IT BE FRAGMENTED IN OTHER WORDS WILL SEPARATE CONTRACTS BE AWARDED TO CIVIL, STRUCTURAL, ELECTRICAL AND MECHANICAL CONTRACTORS; WILL SITE PREPARATION INVOLVE BUILDINGS DEMOLITION IF SO, PROVIDE PARTICULARS OF WORK ENTAILED, WITH PARTICULAR REFERENCE TO BUILDINGS AND POTENTIALLY HAZARDOUS SUBSTANCES THAT MAY HAVE BEEN STORED; THE OVERALL CONTRACT PERIOD FROM���TO���; A BAR CHART SHOWING VARIOUS ACTIVITIES WOULD BE BENEFICIAL TO PREMIUM COMPUTATION; THE FULL CONTRACT VALUE INCLUDING FREE-ISSUE MATERIALS; THE VALUE OF EACH ENGINEERING DISCIPLINE; THE SECURITY PRECAUTIONS TO BE UNDERTAKEN TO PREVENT THEFT, MALICIOUS DAMAGE ETC.;

4. UNDERWRITING CRITERIA CIVIL WORKS � 1 THE VALUE OF CIVIL WORKS; ANY SPECIAL PRECAUTIONS TO BE TAKEN IN VIEW OF GEOTECHNIC OR HYDROLOGY FINDINGS; DESCRIBE THE FOUNDATIONS ESPECIALLY WHETHER THEY INCLUDE PILES AND THEIR TYPE STRIP, RAFT ETC.; IS THE POLICY TO PROVIDE FOR PILING, IF SO TYPE OF PILES ENVISAGED AND EXPECTED DEPTH OF PILES; NAME OF PILING CONTRACTOR; PROVIDE THE DEPTH OF EXCAVATIONS; TO WHAT EXTENT WILL THERE BE REMOVAL OF SUPPORT (LATERAL AND/OR OTHERWISE) TO ADJACENT PROPERTY OR BUILDINGS; IF TEMPORARY AND PERMANENT SUPPORT TO BE INSTALLED WHO WILL UNDERTAKE THIS WORK; NAME THE SUPPORT CONTRACTOR; WILL THERE BE ANY ON-SITE MANUFACTURE OR CASTING OF PRESTRESSED COMPONENTS;

5. UNDERWRITING CRITERIA CIVIL WORKS � 2 PROXIMITY OF SITE TO SEA OR INLAND WATERWAYS; IF A RIVER OR DAM PROVIDE THE 50 YEAR FLOOD HISTORY, IS THERE A POSSIBILITY OF THE SITE BEING FLOODED FROM THIS WATER SOURCE; DESCRIBE THE PRECAUTIONS TO PREVENT FLOODING; DEPENDING ON HYDROLOGY REPORT, WHAT PRECAUTIONS ARE TO BE TAKEN TO HANDLE THE INGRESS OF WATER, FROM AN UNDERGROUND SOURCE; ALSO, GIVE DETAILS OF STANDBY PUMPING ARRANGEMENTS;

6. UNDERWRITING CRITERIA CIVIL WORKS � 3 IF THE CIVIL WORKS COMPRISES SHAFT SINKING TUNNELLING OR OTHER UNDERGROUND WORK THEN DESCRIBE: THE DIAMETER OF THE SHAFT OR TUNNELL, THE PROPOSED DEPTH OF THE SHAFT OR LENGTH OF THE TUNNELL AND WHETHER THE SHAFT OR TUNNELL WILL BE LINED, THE PRE-EXCAVATION GROUND INTEGRITY INVESTIGATIONS, A COPY OF THE REPORT WOULD BE NECESSARY PLUS THE ENGINEER�S RECOMMENDATIONS, PARTICULARS OF THE METHOD OF PROBING AHEAD OF THE WORKING FACE DURING EXCAVATION IS A MUST; FOR ANY RAISEBORING OR TUNNELL BORING WORK THE DIAMETER OF THE RAISEBORE HEAD OR TUNNELL BORING HEAD MUST BE GIVEN PLUS DETAILS AS REQUIRED IN THE SECOND THIRD AND FOURTH PARAMETER ABOVE.

7. PROBING AHEAD OF THE WORKING FACE THIS TYPE OF RADIAL DRILLING AHEAD OF THE WORKING FACE IS TO IDENTIFY THE NATURE OF THE GROUND CONDITIONS AND THE PRESENCE OF WATER TO BE EXPECTED AS THE TUNNEL OR SHAFT CONTINUES SIDE ELEVATION END ELEVATION DRILLING OUTWARDS 30 TO 45 DEGREES FROM THE STRAIGHT LINE

8. UNDERWRITING CRITERIA STRUCTURAL WORKS THE STRUCTURE TO BE DESCRIBED FULLY GIVING : THE TYPE OF THE STRUCTURE IE. FACTORY, WAREHOUSE, OFFICE BLOCK, HOSPITAL OR TENEMENT BUILDING ETC., THE NATURE OF THE STRUCTURE WHETHER IT IS OF CONCRETE, WITH BRICK INFILLS OR A BASIC STEEL STRUCTURE WITH CONCRETE LANDINGS WITH BRICK INFILL ETC., THE NUMBER OF BASEMENTS, DETAILS OF ANY PROTOTYPE OR UNTRIED FEATURES EMBODIED IN THE DESIGN OF THE STRUCTURE, WHETHER STRUCTURAL OR CONSTRUCTION METHOD. IS THE SELECTED CONTRACTOR FAMILIAR WITH THIS METHODOGY, THE NUMBER OF FLOORS, THE TYPE OF FINISHES, DETAILS WHEN ELECTRICALS AND MECHANICALS WILL BE INSTALLED; DESCRIBE THE MEASURES TO PREVENT THE STRUCTURE FROM FLOODING AND WHAT PUMPING ARRANGEMENTS WILL BE PRESENT TO HANDLE THE INGRESS OF WATER.

9. UNDERWRITING CRITERIA ELECTRICAL & MECHANICAL WORKS DESCRIBE THE ELECTRICALS AND MECHANICALS TO BE INCORPORATED INTO THE WORKS IE BOILERS, POWER SUPPLY TRANSFORMERS AND SWITCHGEAR, AIR CONDITIONING AND/OR MANUFACTURING MACHINERY EG TO MANUFACTURE WIDGETS; WHETHER THERE ARE ANY UNTRIED FEATURES OR PROTOTYPES OR WHETHER THE MACHINERY IS STANDARD OF THE SAME TYPE AND SIZE CURRENTLY OPERATING IN MANY FACTORIES; GIVE PARTICULARS OF THE INSTALLATION PROCESS AND TESTING METHODS; WILL PARTS OF THE MACHINERY BE TAKEN INTO OPERATION BEFORE THE PLANT AS A WHOLE IS COMMISSIONED, IN OTHER WORDS WILL THERE BE BENEFICIAL USE BEFORE TAKE-OVER, IF SO, MUST INSURANCE CONTINUE AFTER BEING TAKEN INTO USE? IS COVER TO INCLUDE ELECTRICAL AND MECHANICAL BREAKDOWN? IS THE FEEDSTOCK INFLAMABLE OR IS THERE AN EXPLOSION HAZARD DESCRIBE THE TESTING PROCEDURE PARTICULARLY THE RUNNING TEST AND SAFETY PRECAUTIONS DURING TESTING

10. WHAT DETERMINES A PROTOTYPEOR UNTRIED FEATURE The cylinder on the left is the standard cylinder that has been manufactured for many years and has stood the test of time. All that has been done to manufacture the cylinder on the right is to increase size, otherwise, everything else is the same, thus it is a prototype with untried features. Accordingly, the stresses and strains will be multiples of the original. In other words a failure waiting to happen.

11. UNDERWRITING CRITERIAMAINTENANCE PERIOD GIVE DETAILS OF THE MAINTENANCE REQUIREMENTS OF THE CONTRACT, DOES THE CONTRACT CALL FOR MAINTENANCE VISITS ONLY, LIMITED MAINTENANCE PROVIDING FOR DAMAGE CONSEQUENT ON PRIOR DEFECTS OF MATERIALS, WORKMANSHIP, DESIGN PLAN OR SPECIFICATION OCCURRING DURING CONSTRUCTION AT THE CONTRACT SITE, WIDER FORM OF MAINTENANCE ALLOWING FOR DAMAGE RESULTING FROM ALL PRIOR DEFECTS OF MATERIALS, WORKMANSHIP, DESIGN PLAN OR SPECIFICATION; DOES THE CONTRACT ALLOW FOR SUBROGATION RIGHTS IN THE EVENT OF DEFECTIVE MATERIALS, DESIGN, PLAN OR SPECIFICATION OR OFF-SITE WORKMANSHIP.

12. GENERAL CONSIDERATIONSTHIRD PARTY LIABILITY - 1 LIMIT OF INDEMNITY (INCLUSIVE OR EXCLUSIVE OF EXTENSIONS � R00,000,000; PROPERTY DAMAGE EXCESS RISK LOCATION RELATIVE TO: ADJACENT PROPERTIES EXISTING PUBLIC SERVICES OF WATER, SEWERAGE, ELECTRICITY OVERHEAD LINES OR UNDERGROUND CABLES EXISTING PROPERTY ADJACENT TO CONTRACT WORKS SITE IS THERE TO BE ANY BLASTING, IF SO, GIVE DETAILS DEPTH OF EXCAVATION WILL THE EXCAVATION AFFECT THE SUPPORT OF ADJACENT THIRD PARTY BUILDINGS EXPERTISE OF DESIGN ENGINEER AND CONTRACTOR ARE THE WORKING METHODS STANDARD AND WILL THERE BE ANY METHODS OF WORK UNFAMILIAR TO THE CONTRACTOR

13. GENERAL CONSIDERATIONSPUBLIC LIABILITY - 2 ONE MUST THEN CONSIDER THE NECESSITY TO INCLUDE ANY OR ALL OF THE FOLLOWING EXTENSIONS OF COVER: ARREST, ASSAULT, DISCHARGE AND DEFAMATION EMERGENCY MEDICAL EXPENSES PREVENTION OF ACCESS LEGAL DEFENCE COSTS TRESSPASS OR NUISANCE; REMOVAL OF SUPPORT (LATERAL OR VERTICAL) COULD BE AN EXTENSION, HOWEVER THE TERMS OF THIS COVER DIFFERS CONSIDERABLY FROM THE BASIC COVER, THUS IT IS DESIREABLE TO ISSUE A SEPARATE SECTION OR POLICY. THIS COVER WILL BE DISCUSSED SEPERATELY.

14. PREMIUM COMPUTATION CONTRACT WORKS � GENERAL - 1 UNDERWRITING IS A SCIENCE AND NOT MERELY A RULE OF THUMB; THE UNDERWRITER WHO RELIES ON GUESSWORK MAY BE LUCKY FOR A PERIOD BUT WILL SOON COME SHORT; ONE CANNOT ASSUME THAT A SINGLE RATE WOULD APPLY TO ALL AND ANY PROJECT, NO MATTER HOW SLIGHT, THERE ARE ALWAYS DIFFERENCES WHICH COULD MAKE A VAST DIFFERENCE TO THE RATE CHARGED; ACCORDINGLY EACH RISK MUST BE UNDERWRITTEN ON ITS OWN MERITS AND PECULIARITIES WITH EACH ASPECT BEING GIVEN INDIVIDUAL CONSIDERATION; WE THEN CALCULATE INDIVIDUAL RATES FOR THE CIVIL, STRUCTURAL,ELECTRICAL & MECHANICAL AND LIABILITY RISKS; NO, I AM NOT GOING TO GIVE YOU BASIS RATES, BUT I WILL SUGGEST METHODS OF CALCULATION. THE BASIS RATES ARE FOR EACH UNDERWRITING HOUSE TO DETERMINE THEMSELVES.

15. PREMIUM COMPUTATION CONTRACT WORKS � GENERAL - 2 IT MUST BE APPRECIATED THAT PERILS OF THE ENVIRONMENT HAVE A DIFFERENT IMPACT ON EACH OF THE CONSTRUCTION DISCIPLINES; FOR EXAMPLE, EXCESSIVE RAINFALL MAY NOT BE AS CRITICAL TO A PARTLY CONSTRUCTED STRUCTURE AS IT WOULD TO FOUNDATION EXCAVATIONS, ON THE OTHER HAND WIND MAY NOT CAUSE MUCH DAMAGE TO AN EXCAVATION AS IT WOULD TO A STRUCTURE NOT ENTIRELY BRACED OR STEEL BEING LIFTED INTO POSITION A FURTHER PROBLEM WOULD BE WHEN A STRUCTURE IS NOT FULLY CLAD THUS CAUSING A WIND TUNNELL WITHOUT ANY EXIT; FIRE IS A HAZARD MORE SERIOUS WHERE THE BUILDING IS NEARING COMPLETION OR WHERE MACHINERY HAS BEEN INSTALLED OFTEN PACKING MATERIALS ARE NOT REMOVED FROM SITE. FIRE IS NOT THAT SERIOUS WHEN RELATED TO EXCAVATIONS OR FOUNDATIONS ONE COULD EXPECT MINIMAL DAMAGE;

16. PREMIUM COMPUTATION CONTRACT WORKS � CIVIL WORKS 1 It is usual for there to be a specific rate % for each project type e.g.. ROADS, RAILWAY SYSTEMS, DAMS, SHAFT SINKING, AIRPORT RUNWAYS/APRONS, TUNNELLING AND THE LIKE; THE APPLICABLE RATE X (SAY 2.5%) MUST THEN BE APPORTIONED TO RISK CATEGORIES, FOR EXAMPLE, (THESE % ARE JUST AN ILLUSTRATION AND ARE NOT REALISTIC) STORM/WIND 45% FIRE/LIGHTNING/EXPLOSION 5% COLLAPSE/LANDSLIDE 40% THEFT/MALICIOUS DAMAGE 10%; NEXT ONE MUST DECIDE ON THE EXTENT OF THE RISK APPLICABLE TO EACH CATEGORY, THUS STORM AND WIND ARE 45% OF 2.5%= 1.125% BUT THE WORK IS BEING UNDERTAKEN DURING THE DRY SEASON THEREFORE THIS RISK IS REGARDED AS MINIMAL SAY 25% OF THE NORM, OUR RATE FOR THIS PORTION IS THUS 25% 1.125% = 0.281%; THE SAME CALCULATION IS CARRIED OUT FOR EACH OF THE OTHER CATEGORIES OF THE RATE X;

17. PREMIUM COMPUTATION CONTRACT WORKS � CIVIL WORKS 2 THE NEXT PART OF THE CALCULATION IS TO TAKE INTO ACCOUNT THE PERIOD ON RISK, THIS MAY NOT ONLY BE THE CONSTRUCTION PERIOD, BUT THE RISK MAY CONTINUE UNTIL TAKE-OVER OF THE COMPLETED PROJECT AS IN THE CASE OF A TURNKEY PROJECT; IT MUST BE REMEMBERED THAT IF TAKE-OVER IS TO BE DELAYED UNTIL FINAL COMPLETION, THEN THE CIVIL RISK WILL BE EXPOSED FOR A PERIOD THAT MUST BE DETERMINED (DURING CONSTRUCTION AND THEREAFTER UNTIL TAKEOVER); FINALLY THERE MUST BE A CHARGE FOR THE MAINTENANCE PERIOD DEPENDING ON THE NATURE OF MAINTENANCE COVER REQUIRED IN TERMS OF THE CONTRACT; THE CUMULATIVE RATE IS THEN APPLIED TO THE CIVIL PORTION OF THE CONTRACT VALUE TO PRODUCE A PREMIUM.

18. PREMIUM COMPUTATION CONTRACT WORKS � STRUCTURAL WORKS 1 There is a specific rate % for each project type e.g.. RESIDENTIAL BUILDINGS, OFFICE BLOCKS, HOTELS, HOSPITALS, SHOPPING MALLS, BRIDGES, FACTORY PREMISES, WATER TOWERS CHIMNEYS AND THE LIKE; THE APPLICABLE RATE X (SAY 1%) MUST THEN BE APPORTIONED TO RISK CATEGORIES, FOR EXAMPLE, (THESE % ARE JUST AN ILLUSTRATION AND ARE NOT REALISTIC) STORM/WIND 20% FIRE/LIGHTNING/EXPLOSION 30% COLLAPSE/LANDSLIDE 35% THEFT/MALICIOUS DAMAGE 15%; NEXT ONE MUST ONE MUST DECIDE ON THE EXTENT OF THE RISK APPLICABLE TO EACH CATEGORY, THUS FIRE ETC. ARE 30% OF X(X BEING SAY 1%) (30%X)= 0.3% BUT THE WORK IS BEING UNDERTAKEN OUT OF THE LIGHTNING SEASON AND ALL PACKING MATERIALS ARE REMOVED FROM THE BUILDING THEREFORE THIS RISK IS REGARDED AS MINIMAL SAY 20% OF THE NORM, OUR RATE FOR THIS PORTION IS THUS 20% OF 0.3% =0.06%; THE SAME CALCULATION IS CARRIED OUT FOR EACH OF THE OTHER CATEGORIES OF THE RATE X;

19. PREMIUM COMPUTATION CONTRACT WORKS � STRUCTURAL WORKS 2 THE NEXT PART OF THE CALCULATION IS TO TAKE INTO ACCOUNT THE PERIOD ON RISK, THIS MAY NOT ONLY BE THE CONSTRUCTION PERIOD, BUT THE RISK MAY CONTINUE UNTIL TAKE-OVER OF THE COMPLETED PROJECT AS IN THE CASE OF A TURNKEY PROJECT; IT MUST BE REMEMBERED THAT IF TAKE-OVER IS TO BE DELAYED UNTIL FINAL COMPLETION, THEN THE STRUCTURAL RISK WILL BE AT RISK FOR AN EXTENDED PERIOD WHICH MUST BE DETERMINED ESPECIALLY IF MACHINERY IS TO BE INSTALLED BEFORE TAKE-OVER OF THE COMPLETED STRUCTURE THUS AN ADDITIONAL CHARGE FOR THE EXTENDED PERIOD AFTER CONSTRUCTION IS WARRANTED; FINALLY THERE MUST BE A CHARGE FOR THE MAINTENANCE PERIOD DEPENDING ON THE NATURE OF MAINTENANCE COVER REQUIRED IN TERMS OF THE CONTRACT; THE CUMULATIVE RATE IS THEN APPLIED TO THE STRUCTURAL PORTION OF THE CONTRACT VALUE TO PRODUCE A PREMIUM.

20. PREMIUM COMPUTATION CONTRACT WORKS � ELECTRICAL & MECHANICAL WORKS - 1 UNLIKE CIVIL AND STRUCTURAL RATING, THE ELECTRICAL AND MECHANICAL RATE IS BUILT UP OVER A NUMBER OF FACTORS, THESE ARE: HANDLING AND STATIC TESTING TESTING AND RUNNING FIRE AND SPECIAL PERILS DURING CONSTRUCTION FIRE AND SPECIAL PERILS DURING TESTING ENVIRONMENT BENEFICIAL USE IF REQUIRED IN TERMS OF CONTRACT MAINTENANCE ONCE AGAIN BASED ON THE REQUIRED COVER; EACH OF THESE RATE COMPONENTS HAS ITS OWN SPECIFIC RATE WHICH EXCEPT FOR THE HANDLING AND STATIC TESTING RATE ARE ADJUSTED TO TAKE IN TO ACCOUNT THE PARTICULAR PERIOD OF COVER AND RISK FACTOR. EACH OF THESE RATE COMPONENTS ARE EXPLAINED AS FOLLOWS:

21. PREMIUM COMPUTATION CONTRACT WORKS � ELECTRICAL & MECHANICAL WORKS - 2 HANDLING AND STATIC TESTING: THIS RATE COMPONENT ALLOWS FOR PRE ERECTION STORAGE ON SITE, MOVEMENT FROM STORAGE TO POINT OF ERECTION, HOISTING ONTO FOUNDATIONS, ASSEMBLY THEN NON ENERGISED TESTING TESTING AND RUNNING: IT IS AT THIS STAGE THAT POWER IS FIRST APPLIED TO THE MACHINE AND FEEDSTOCK INTRODUCED. EFFECTIVELY THIS COVER EQUATES TO MACHINERY BREAKDOWN COVER. THE PERIOD IS USUALLY RESTRICTED TO 30 DAYS ON WHICH THE MACHINERY IS OPERATED FOR TESTING PURPOSES. IT IS ASSUMED THAT ALL MANUFACTURERS SAFETY REQUIREMENTS AND COMMISSIONING PROCEDURES WILL BE ADHERED TO AND THAT SAFETY DEVICES WILL NOT BE OVERRIDDEN OR NULLIFIED. IT IS USUAL THAT WHERE THERE ARE ANY UNTRIED FEATURES OR PROTOTYPES THAT TESTING COVER WILL BE EXCLUDED; TESTING COVER IS USUALLY ONLY GIVEN ON NEW MACHINERY;

22. PREMIUM COMPUTATION CONTRACT WORKS � ELECTRICAL & MECHANICAL WORKS - 3 FIRE AND SPECIAL PERILS: THESE RISKS ARE NO DIFFERENT TO THOSE GIVEN UNDER A FIRE OR ASSETS POLICY, ACCORDINGLY, THE RATE SHOULD BE SIMILAR TO THE STANDARD FIRE POLICY. THIS COMPONENT IS DIVIDED INTO TWO CATEGORIES, NAMELY DURING CONSTRUCTION AND THEN DURING TESTING AND RUNNING. A LESSER RATE SHOULD BE APPLIED TO THE CONSTRUCTION PERIOD POSSIBLY 50% OF FIRE & PERILS RATE, WHEREAS THE FULL RATE SHOULD BE APPLIED TO THE TESTING PERIOD. IN BOTH INSTANCES THE RATE SHOULD BE ADJUSTED FOR THE PERIOD OF COVER; ENVIRONMENT: THIS COMPONENT TAKES INTO CONSIDERATION THE RISKS OF THEFT, MALICIOUS DAMAGE GEOTECHNIC AND HYDROLOGY RISKS AND A VARIETY OF OTHER MINOR PERILS.

23. UNDERWRITING CRITERIAPUBLIC LIABILITY - 1 THIS SECTION OF THE POLICY PROVIDES FOR LIABILITY TO THIRD PARTIES IN RESPECT OF LOSS OF OR DAMAGE TO PROPERTY OR PERSONAL INJURIES OR DEATH OF PERSONS NOT BEING EMPLOYEES OR THE FAMILY OF THE INSURED PARTY; WE ARE NOT TALKING ABOUT A SEPARATE POLICY, BUT AS A SECTION TO A CONSTRUCTION POLICY, THUS ANY LIABILITY INCURRED SHOULD ORIGINATE AT THE CONTRACT SITE IN CONNECTION WITH SITE ACTIVITIES DURING THE PERIOD OF INSURANCE; TO PROVIDE FOR ANY WIDER COVER A GENERAL LIABILITY POLICY SHOULD BE TAKEN OUT IN THE ACCIDENT DEPARTMENT; THERE ARE TWO BASES OF COMPUTING PUBLIC LIABILITY PREMIUMS EITHER ON: LIMIT OF LIABILITY, OR CONTRACT VALUE; NEITHER BASIS CAN BE CONSIDERED SUPERIOR TO THE OTHER, EFFECTIVELY THE PREMIUM SHOULD BE THE SAME;

24. UNDERWRITING CRITERIAPUBLIC LIABILITY - 2 RECOGNISING THAT THERE ARE TWO ACCEPTABLE BASES, WHAT FACTORS SHOULD BE TAKEN INTO CONSIDERATION IN COMPUTING THE PREMIUM; ALL THOSE LISTED HEREUNDER WILL EITHER BE PROMINENT IN THE PREMIUM CALCULATION OR OF LITTLE OR NO EFFECT, EACH MUST BE CONSIDERED ON MERITS: IS THE SITE A GREEN FIELDS OR BROWN FIELDS SITE, IS THERE A POSSIBILITY OF DAMAGE TO EXISTING PROPERTY EITHER ON-SITE OR ON SITES ADJACENT TO THE CONTRACT SITE, IS THE RISK LOCATION IN/OUT OF TOWN � ARE THERE ANY PUBLIC SERVICES IN THE VICINITY, ARE ANY EXPLOSIVES TO BE USED, DEPTH OF EXCAVATION/ GEOTECHNIC RISKS, EXPERTISE AND TRACK RECORD OF CONTRACTOR AND DESIGN ENGINEER, WORKING METHODS AND DESIGN, PLAN OR SPECIFICATION, RISK MANAGEMENT; THE POTENTIAL RISK OF SPREAD OF FIRE TO ADJACENT PROPERTIES EITHER ON SITE OR IN THE PROXIMITY THERETO

25. UNDERWRITING CRITERIATHIRD PARTY LIABILITY - 3 EXTENSIONS OF COVER ARE THE SELECTED EXTENSIONS OF COVER TO BE WITHIN THE OVERALL LIMIT OF INDEMNITY OR ARE THEY TO HAVE SEPARATE LIMITS OF INDEMNITY? IF SO, PLEASE PROVIDE THE REQUIRED LIMITS EXTENSION OF COVER LIMIT OF INDEMNITY ARREST,ASSAULT, DISCHARGE OR DEFAMATION R00,000,000 EMERGENCY MEDICAL EXPENSES R 000,000 PREVENTION OF ACCESS R 0,000,000 LEGAL DEFENCE COSTS R 0,000,000 TRESSPASS OR NUISANCE R00,000,000

26. PREMIUM COMPUTATION PUBLIC (THIRD PARTY) LIABILITY - 1 THE CALCULATION BEGINS WITH A BASIC RATE % WHICH IS A FUNCTION OF THE LIMIT OF INDEMNITY WHICH ENVISAGES A 12 MONTH CONTRACT PERIOD, THE BASIC RATE DIFFERS ACCORDING TO WHETHER IT IS TO BE APPLIED TO THE CONTRACT VALUE OR THE LIMIT OF INDEMNITY; THE FIRST ADJUSTMENT TAKES INTO CONSIDERATION THE PERIOD OF THE CONTRACT BY ADJUSTMENT UPWARDS OR DOWNWARDS FOR LONGER OR SHORTER PERIODS FROM TAKE-OVER OF SITE UNTIL FINAL HANDOVER OF THE PROJECT; THE NEXT ADJUSTMENTS TAKE INTO CONSIDERATION THOSE PREVIOUSLY MENTIONED WHICH ARE AS FOLLOWS:

27. PREMIUM COMPUTATIONPUBLIC (THIRD PARTY) LIABILITY - 2 IS THE SITE GREEN FIELDS OR BROWN FIELDS IS THERE A POSSIBILITY OF DAMAGE TO EXISTING PROPERTY EITHER ON-SITE OR ON SITES ADJACENT TO THE CONTRACT SITE; IS THE RISK LOCATION IN/OUT OF TOWN � ARE THERE ANY PUBLIC SERVICES IN THE VICINITY; ARE ANY EXPLOSIVES TO BE USED; DEPTH OF EXCAVATION/ GEOTECHNIC RISKS; EXPERTISE AND TRACK RECORD OF CONTRACTOR AND DESIGN ENGINEER; WORKING METHODS AND DESIGN, PLAN & SPECIFICATION; RISK MANAGEMENT; FINALLY THE EXTENSIONS MUST BE ADDRESSED:

28. PREMIUM COMPUTATIONPUBLIC (THIRD PARTY) LIABILITY - 3 ARREST, ASSAULT, DISCHARGE AND DEFAMATION, EMERGENCY MEDICAL EXPENSES, PREVENTION OF ACCESS, LEGAL DEFENCE COSTS, TRESSPASS OR NUISANCE. THE COMPUTATION OF THE REMOVAL OF SUPPORT RISK IS UNDERTAKEN ON MUCH THE SAME BASIS, BUT THE BASIC RATE IS MUCH HIGHER THAN FOR STANDARD LIABILITIES; WE HAVE NOT MENTIONED THE RISKS APPLICABLE TO IMPLOSION OF BUILDINGS BEFORE NOW, HOWEVER, THESE ARE MUCH MORE ONEROUS THAN ORDINARY LIABILITIES OR REMOVAL OF SUPPORT LIABILITIES, BUT WE DO NOT BELIEVE THESE RISKS TO BE APPROPRIATE TO THIS DISCUSSION.

29. PREPARING A QUOTATION IT IS IMPORTANT FOR THE UNDERWRITER TO BE AWARE OF HOW THE QUOTATION IS PRESENTED, YOU LIVE BY YOUR WRITTEN WORD, OR LACK THEREOF; CLEARLY, IF THE INTERMEDIARY HAS ASKED FOR A CERTAIN EXTENSION AND THIS ASPECT HAS NEITHER NEGATIVELY NOR POSITIVELY BEEN ADDRESSED, IT CAN BE ARGUED THAT THE REQUEST HAS BEEN ACCEPTED; THE FOLLOWING SUGGESTED QUOTATION WORDING MAY ASSIST IN EXPRESSING CLEARLY THE INTENTION; AS AN INTERMEDIARY YOU TOO SHOULD DEFINE CLEARLY THE NATURE AND EXTENT OF COVER YOU ARE REQUESTING, THE ONUS IS THEN ON THE UNDERWRITER TO ACCEPT OR REJECT YOUR REQUEST BY WRITTEN COMMENT IN THE QUOTQTION PRESENTED.

30. SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC LIABILITY - 1 XYZ INSURANCE COMPANY LIMITED (THE INSURER) 25 SUMMER PLACE, GLORIOUS COVE INSURER�S CONTACT PERSON: JOHN DOE TELEPHONE NUMBER: 011 398 0000 E-MAIL ADDRESS DOEJ@XYZINS.CO.ZA DATE OF QUOTATION: 1ST JULY, 2010 CLIENT: ABC MANUFACTURING LIMITED INTERMEDIARY: SMITH AND JONES BROKERS - R SMITH INSURED PROJECT: NEW ELECTRIC MOTOR MANUFACTURING FACILITY FOR ABC MANUFACTURING PROJECT VALUE: R25,500,000 CIVIL WORKS R5,000,000 STRUCTURAL WORKS R7,500,000 ELECTRICAL/MECHANICAL WORKS R10,240,000 PRELIMINARY & GENERAL R2,760,000

31. SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC LIABILITY - 2 POLICY WORDING: XYZ INSURANCE COMPANY LIMITED CONTRACT WORKS WORDING OR ANY OTHER WORDING AS MAY BE AGREED BY THE COMPANY (XYZ INS CO LTD) (THE INTERMEDIARY MAY HAVE SUBMITTED A POLICY WORDING AS PART OF HIS QUOTATION REQUEST, YOU MUST COMMENT THEREON AS TO ITS ACCEPTABILITY OR OTHERWISE AND REFER TO AN ACCEPTABLE WORDING) THE INSURED PARTIES: THE PRINCIPAL: ABC MANUFACTURING LIMITED THE SITE CONTRACTOR: MLM CONTRACTORS (PTY) LIMITED SUB-CONTRACTORS: EMPLOYED ON THE CONTRACT SITE (EMPLOYED BY THE CONTRACTOR(S) OR NOMINATED BY THE PRINCIPAL) BUT ONLY TO THE EXTENT OF LOSS, DAMAGE OR LIABILITY ORIGINATING AT THE CONTRACT SITE ARISING OUT OF THEIR SITE INVOLVEMENT EXCLUDING ANY PROFESSIONAL ACTIVITY OR OFF-SITE MANUFACTURING OR MANUFACTURING GUARANTEES

32. SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC LIABILITY - 3 THE INSURED PARTIES (CONTINUED): ANY OTHER NAMED PARTY PROPOSED TO AND ACCEPTED BY THE INSURER SUCH AS PROJECT MANAGERS, MANUFACTURERS, SUPPLIERS OR PROFESSIONALS BUT ONLY TO THE EXTENT OF LOSS, DAMAGE OR LIABILITY ORIGINATING AT THE CONTRACT SITE, EXCLUDING ANY PROFESSIONAL ACTIVITY OFF-SITE MANUFACTURING PROCESS OR MANUFACTURERS GUARANTEES; BASIS OF INDEMNIFICATION: CONTRACT WORKS LIMIT OF INDEMNITY THE INSURED PROPERTY R25,500,000 EXPEDITING COSTS 50% OF AGREED CLAIM EXCEEDING R100,000 OR WHERE LOSS DOES NOT EXCEED R100,000 50,000 ESCALATION DURING CONTRACT PERIOD 15% DURING PERIOD OF DAMAGE REINSTATEMENT 15%

33. SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC LIABILITY - 4 CURRENCY FLUCTUATION 20% DEMOLITION AND DEBRIS REMOVAL ASSOCIATED WITH DAMAGE TO WORKS R00,000,000 WITHOUT DAMAGE TO THE WORKS R00,000,000 PROFESSIONAL FEES R 0,000,000 FIRE BRIGADE CHARGES R 0,000,000 PUBLIC AUTHORITIES CHARGES R 0,000,000 PUBLIC AUTHORITIES REINSTATEMENT R 0,000,000 OFF-SITE STORAGE NOT AT MNFRS. R 0,000,000 WORK AWAY R 0,000,000 REMOVAL TO A PLACE OF SAFETY R 0,000,000 RECORDS AND PLANS R 0,000,000 CLAIMS PREPARATION COSTS R 0,000,000

34. SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC LIABILITY - 5 THIRD PARTY LIABILITY LIMIT OF INDEMNITY R00,000,000 INCLUDED IN LIMIT OF INDEMNITY LEGAL DEFENCE COSTS R 0,000,000 EMERGENCY MEDICAL EXPENSES R 000,000 TRESSPASS OR NUISANCE R 0,000,000 ARREST ASSAULT DISCHARGE DEFAMATION R 000,000 WHERE A ZERO HAS BEEN PLACED OPPOSITE AN ITEM THIS MEANS THAT NO COVER IS TO BE GIVEN FOR THAT ITEM. NOTE TO UNDERWRITER THE LIMITS FOR THE EXTENSIONS SHOWN ABOVE ARE NOT NECESSARILY SUB LIMITS INCLUDED IN THE OVERALL LIMIT OF INDEMNITY. IF UNDERWRITTEN AS ADDITIONAL LIMITS THE WORDS �INCLUDED IN LIMIT OF INDEMNITY� SHOULD BE OMITTED AND THE WORDS �ADDITIONAL TO LIMIT OF INDEMNITY� ADDED

35. SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC LIABILITY - 6 THE PROPERTY INSURED: THE PERMANENT WORKS BEING ALL WORKS AND PROPERTY AS DESCRIBED IN THE CONTRACT DOCUMENTS AS THE CONTRACT WORKS AND ANY TEMPORARY WORKS CREATED OR INSTALLED IN ORDER TO CONSTRUCT THE PERMANENT WORKS; PERIOD OF COVER: COVER COMMENCES WITH THE HANDING OVER OF THE CONTRACT SITE TO THE CONTRACTOR, OR THE DELIVERY OF MATERIALS AND OTHER THINGS FOR INCORPORATION INTO THE PROJECT; DURING ANY PERIOD OF STORAGE ON OR ABOUT THE CONTRACT SITE AWAITING INCORPORATION, CONSTRUCTION OR ERECTION DURING ANY PERIOD OF OFF-SITE STORAGE AT ANY SITE AGREED BY THE INSURER WHICH SHALL NOT INCLUDE SUPPLIERS OR MANUFACTURERS PREMISES, WHILST BEING CONSTRUCTED, ERECTED OR INSTALLED,

36. SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC LIABILITY - 7 PERIOD OF COVER: PERIOD OF COVER (CONTINUED): DURING ANY PERIOD OF CONTRACTUAL BENEFICIAL OCCUPATION OF ANY COMPLETED OR PARTIALLY COMPLETED WORKS DECLARED TO AND ACCEPTED (IN WRITING) BY THE INSURER NOT EXCEEDING MONTHS DURING ANY CONTRACTUAL MAINTENANCE PERIOD COVERING DAMAGE: OCCURRING DURING CONTRACTUAL VISITS BY THE CONTRACTOR OR MANUFACTURER FOR THE PURPOSE OF CALIBRATION ADJUSTMENT OR MAKING GOOD DEFECTS OR DAMAGE DUE TO CONSTRUCTION OR ERECTION OR MAKING GOOD ANY DAMAGE DONE DURING SUCH CONTRACTUAL VISITS DAMAGE DUE TO PRIOR DEFECTS OR DEFECTIVE CONDITIONS BUT EXCLUDING THE DEFECTIVE CONDITION ITSELF, WHICH SHOULD FORM THE SUBJECT OF A MANUFACTURER�S GUARANTEE OR PROFESSIONAL INDEMNITY;

37. SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC LIABILITY - 8 THE DEDUCTIBLES: IN RESPECT OF EACH AND EVERY CLAIM ARISING OUT OF OR IN CONNECTION WITH ANY ONE EVENT OR OCCURRENCE OR SERIES OF OCCURRENCES ARISING OUT OF OR IN CONNECTION WITH ANY ONE EVENT, THE INSURED SHALL BEAR THE FIRST: PERIL EXCESS COLLAPSE R0,000 STORM, WIND, TEMPEST, FLOOD, SNOW, R0,000 HAIL, SLEET, FROST SUBSIDENCE, LANDSLIP R0,000 DEFECTIVE DESIGN, PLAN, R0,000 SPECIFICATION FIRE, LIGHTNING, EXPLOSION R0,000 THEFT, MALICIOUS DAMAGE R0,000

38. SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC LIABILITY - 9 RATE AND PREMIUM BASED ON CONTRACT VALUE: CONTRACT WORKS 0,00% R000,000 THIRD PARTY LIABILITY 0,00% R 00,000 TERMS AND CONDITIONS OF QUOTATION: 1. THIS QUOTATION HOLDS GOOD FOR 90 DAYS FROM THE DATE SHOWN AS THE �DATE OF QUOTATION�; 2. THE QUOTATION IS BASED ON THE UNDERWRITING INFORMATION SUPPLIED BY THE INTERMEDIARY WHICH SHALL FORM THE BASIS HEROF EXCEPT AS EXCLUDED HEREIN SHOULD THERE BE ANY CHANGES IN THE INFORMATION SUPPLIED THE COMPANY RESERVES THE RIGHT TO AMEND THIS QUOTATION ACCORDINGLY; 3. THE DEFECTS EXCEPTION ENVISAGED HEREBY IS THE �COSTS ADDITIONAL� �DE5� ,LEG2� ETC.;

39. CONTRACTOR�S LIABILITIES A CONTRACTOR CAN INCUR LIABILITIES FROM MANY SOURCES THUS HE NEEDS A PACKAGE OF LIABILITY COVERS OVER AND ABOVE THAT GIVEN UNDER A CONTRACT WORKS OR CONSTRUCTION POLICY. IT CAN EVEN BE SAID THAT A COMPREHENSIVE LIABILITY PACKAGE SHOULD INCLUDE HIS POTENTIAL CONSTRUCTION RISKS LIABILITIES. ACCORDINGLY, THE CONSTRUCTION POLICY SHOULD EXCLUDE THE CONTRACTOR�S LIABILITIES, HOWEVER, WHERE OTHER PARTIES ARE INVOLVED ON THE CONSTRUCTION SITE THEY MAY NEED TO BE COVERED FOR CONSTRUCTION LIABILITIES. THE QUESTION THEN ARISES, SHOULD THE CONSTRUCTION POLICY WAIVE SUBROGATION RIGHTS AGAINST THE CONTRACTOR?

40. CONTRACTOR�S LIABILITY POLICY -1 LET US EXAMINE THE RECOMMENDED COMPONENTS TO A COMPREHENSIVE CONTRACTOR�S LIABILITY POLICY: IT IS UNUSUAL FOR THIS TYPE OF POLICY TO BE UNDERWRITTEN IN THE CONSTRUCTION OR ENGINEERING DEPARTMENT IT IS MORE AN ACCIDENT DEPARTMENT RISK, FIRSTLY, WE MUST UNDERSTAND THAT THESE COVERS CAN EITHER BE BASED ON �CLAIMS MADE� OR �CLAIMS INCURRED� THE FORMER BASIS RECOGNISES THAT ANY CLAIM LODGED AGAINST THE INSURED DURIUNG A PARTICULAR PERIOD OF INSURANCE, IRRESPECTIVE OF WHEN THE TRIGGERING EVENT OCCURRED, SHALL BE REGARDED AS VALID AS LONG AS IT FALLS WITHIN THE AMBIT OF THE POLICY, ON THE OTHER HAND ON A CLAIMS INCURRED BASIS ANY CLAIM LODGED AGAINST THE INSURED MUST THEN REVERT TO THE POLICY IN FORCE AT THE TIME THAT THE TRIGGERING EVENT OCCURRED;

41. CONTRACTOR�S LIABILITY POLICY -2 THE FOLLOWING ARE THE MORE COMMON SECTIONS TO A COMPREHENSIVE Contractor�s Liability Policy: PUBLIC LIABILITY -GENERAL AND CONTRACTING LIABILITIES PRODUCTS LIABILITY �PRODUCTS MANUFACTURED OR SUPPLIED EMPLOYERS� LIABILITY �INJURY OR SICKNESS ARISING OUT OF EMPLOYMENT, PROFESSIONAL INDEMNITY �BREACH OF PROFESSIONAL ACTIVITY OR DUTY, MOTOR EXCESS OF LOSS LIABILITY �DUE TO LOSS OR ACCIDENT DURING THE PERIOD OF THE POLICY, PRODUCTS GUARANTEE �LIABILITY FOR PRODUCTS SUPPLIED, SOLD ,INSTALLED ETC., PRODUCT RECALL �WHERE SUCH PRODUCT MAY CAUSE INJURY OR DAMAGE, CARRIERS LIABILITY �DAMAGE ARISING OUT OF THE CARRIAGE OF GOODS INCLUDING CONSEQUENTIAL LOSS,

42. CONTRACTOR�S LIABILITY POLICY -3 LIABILITY SECTIONS CONTINUED: PLANT HIRE LIABILITY �LEGAL LIABILITY FOR LOSS OR DAMAGE IN TERMS OF A HIRE AGREEMENT INCLUDING CONSEQUENTIAL LOSS, PURE ECONOMIC LOSS �CLAIMS MADE DURING THE PERIOD OF INSURANCE OTHER THAN FOR PROFESSIONAL SERVICES FOR COMPENSATION IN TORT, DELICT OR STATUTE; THE EXTENSIONS OF COVER ARE SIMILAR TO THOSE UNDER THE MORE SPECIFIC CONSTRUCTION POLICY LIABILITY SECTION; WHERE A MORE SPECIFIC POLICY INCLUDING LIABILITIES HAS BEEN TAKEN OUT THE CONTRACTOR�S LIABILITY POLICY WILL ONLY PROVIDE LIABILITY FOR DIFFERENCES IN COVER OR LIMIT OF INDEMNITY, IT WILL NOT BE BROUGHT IN TO CONTRIBUTION WITH THE MORE SPECIFIC POLICY;

43. CONSTRUCTION PLANT INSURANCE - 1 WHAT COMPRISES PLANT UNDER A CONSTRUCTION POLICY? MOBILE PLANT AND EQUIPMENT: MOBILE CRANES, CRAWLER CRANES, DUMP TRUCKS, BULLDOZERS, ROAD SCRAPERS, BACKACTORS, EXCAVATORS, ROAD TANKERS (WATER, FUEL OR BITUMEN), ROAD ROLLERS; NON MOBILE PLANT AND EQUIPMENT: CONCRETE BATCH PLANT, CONCRETE MIXERS AIR COMPRESSORS, ELECTRICITY GENERATING PLANT, MINI SUB-STATIONS, CONVEYOR SYSTEMS, TOWER CRANES, WELDING GENERATORS AND TRANSFORMERS; MINING PLANT AND EQUIPMENT: DRAGLINES, EXCAVATORS, JUMBO DRILL RIGS, MINING SCOOPS, DUMP TRUCKS AND MINE WINDERS LONG WALL COAL CUTTERS, MINING SCOOPS AND TUNNELL BORING MACHINES;

44. CONSTRUCTION PLANT INSURANCE - 2 CLASSES OF OWNERSHIP: CONTRACTORS WHO OWN PLANT FOR CONTRACTING WORK; PLANT OWNED FOR OWN USE SUCH AS MINING OPERATIONS, INDUSTRIAL WORKS AND SERVICE INDUSTRIES; PLANT HIRE COMPANIES FOR HIRE TO CUSTOMERS; VIRTUALLY EVERY PROJECT REQUIRES PLANT OF ONE TYPE OR ANOTHER, LET US CONSIDER THE VARIOUS CATEGORIES OF PLANT: CONSTRUCTION CONTRACTORS: BUILDING CONTRACTORS � CONCRETE BATCH PLANT, CRANES MOBILE, CRAWLER AND TOWER, CONCRETE MIXERS, CONCRETE ESCALATORS, PUMPS CONCRETE AND WATER, EXCAVATORS, BACKACTORS AND THE LIKE ROAD CONSTRUCTION CONTRACTORS � THESE CONTRACTORS USE A LARGE VARIETY OF PLANT SUCH AS, SCRAPERS, EXCAVATORS, ROLLERS, BULLDOZERS, BACKACTORS, MOBILE CRANES,AIR COMPRESSOR SETS, PAVING MACHINES ETC.;

45. CONSTRUCTION PLANT INSURANCE - 3 MINING OPERATIONS (MAINLY OPENCAST): EXCAVATORS, DRAGLINES, JUMBO DRILLS, EARTH MOVING TRUCKS, MINING SCOOPS, CONVEYOR SYSTEMS, CRUSHERS, CRANES, COMPRESSORS, DIESEL GENERATING PLANT ETC. IN SOME INSTANCES THE PLANT MAY INCLUDE MINE WINDERS OR TUNNELL BORING MACHINES; PLANT HIRE COMPANIES: THEIR PURPOSE IS AS A SERVICE TO CONSTRUCTION, MINING AND INDUSTRY, TO PROVIDE PLANT AND MACHINERY AS REQUIRED FOR A VARIETY OF JOBS. SOMETIMES THESE HIRE COMPANIES ARE A DIVISION WITHIN A CONSTRUCTION, MINING OR INDUSTRIAL COMPANY, THE PURPOSE OF WHICH IS TO SEPARATE THE COSTLY AND ONEROUS OWNERSHIP OF PLANT AND MACHINERY FROM THEIR CORE BUSINESS, WHETHER THIS BE CONSTRUCTION, MINING OR OTHER INDUSTRIAL ACTIVITY;

46. CONSTRUCTION PLANT INSURANCE � 4THE NEED FOR INSURANCE THIS TYPE OF PLANT & EQUIPMENT IS GENERALLY HIGH RISK, SUSCEPTIBLE TO IMPACT, FIRE, THEFT AND ELEMENTAL PERILS. WE ARE NOT SUGGESTING THAT THE USERS DO SO NEGLIGENTLY, CARELESSLY OR WITHOUT REGARD FOR POSSIBLE DANGER OR DAMAGE. PLANT IS USUALLY OPERATED BY A DEDICATED OPERATOR OR OPERATORS, THUS THE ONUS FOR ANY UNDUE OPERATION OF THE PLANT RESULTING IN DAMAGE COULD BE PEGGED AT THE DOOR OF AN INDIVIDUAL. IT MUST BE APPRECIATED THAT THIS TYPE OF PLANT HAS LARGE QUANTITIES OF FUEL OIL AND HYDRAULIC OIL BOTH OF WHICH ARE HIGHLY INFLAMABLE; DEPENDING ON THE TERRAIN IN WHICH IT WORKS TOPPLING OVER OR OVERTURNING IS A VERY REAL RISK; IN VIEW OF THE ELEMENT OF RISK WHICH IS HIGH & VARIED IT WOULD BE UNWISE NOT TO INSURE THE PLANT.

47. CONSTRUCTION PLANT INSURANCE � 5THE INSURANCE POLICY COVER THE COVER IS SIMILAR FOR ALL CLASSES OF OWNERSHIP AS THIS EQUIPMENT IS ESSENTIALLY FOR OUTDOOR USE, IT QUALIFIES FOR WHAT CAN BE TERMED �ALL RISKS� COVER. THIS DOES NOT MEAN THAT THERE ARE NO TERMS AND CONDITIONS APPLICABLE TO THE INSURANCE, INDEED THERE ARE LIMITING FACTORS TO THE COVER. THE COVER EMBRACES: ELECTRICAL AND MECHANICAL BREAKDOWN (OPTIONAL COVER) FIRE LIGHTNING EXPLOSION ELEMENTAL PERILS FLOOD THEFT MALICIOUS DAMAGE IMPACT COLLISION OVERTURNING UNINTENTIONAL OVERLOADING

48. CONSTRUCTION PLANT INSURANCE � 6THE INSURANCE POLICY EXCEPTIONS ALTHOUGH WE REFER TO THE COVER AS BEING �ALL RISKS�, NEVERTHELESS THERE ARE SOME EXCEPTIONS THESE ARE AS FOLLOWS: WEAR AND TEAR AND GRADUAL DETERIORATION; PENALTIES FOR DELAY AND GUARANTEES OF PERFORMANCE; LOSS OF USE; TYRES AND TUBES; EXPENDABLE PARTS AND TOOLS; THEFT NOT IDENTIFIABLE WITH A SPECIFIC INCIDENT; TANDEM OR MULTIPLE LIFTS; EXISTING DEFECTS, WILFUL ACTS OR NEGLIGENT ACTS; EXPERIMENTS OR INTENTIONAL OVERLOADING; WHILST BEING OPERATED BY A PERSON: UNDER THE INFLUENCE OF INTOXICATING LIQUOR OR DRUGS, AUTHORISED BY THE OWNER OR HIS RESPONSIBLE PERSON WHO IS NOT QUALIFIED TO OPERATE THE PLANT ELECTRICAL OR MECHANICAL BREAKDOWN (IF OPTION NOT REQUIRED);

49. CONSTRUCTION PLANT INSURANCE � 7HIRED-IN PLANT POLICY AMENDMENT THE POLICY WORDING IS GENERALLY SIMILAR WHETHER COVERING OWNED PLANT OR HIRED-IN PLANT, TO ACHIEVE THE ADJUSTMENT TO THE STANDARD POLICY THE FOLLOWING MEMORANDA ARE INCLUDED: A) THE INSURED�S LEGAL LIABILITY UNDER ANY HIRING AGREEMENT TO PAY COMPENSATION FOR PHYSICAL LOSS OF OR DAMAGE TO ANY INSURED HIRED-IN MACHINERY WHILST UNDER HIS CUSTODY OR CONTROL AT THE INSURED�S PREMISES DESCRIBED IN THE SCHEDULE HERETO; B) THE INSURED�S LEGAL LIABILITY UNDER ANY HIRING AGREEMENT TO PAY CONTINUING HIRE CHARGES IN CONSEQUENCE OF PHYSICAL LOSS OF OR DAMAGE TO THE INSURED HIRED-IN MACHINERY DESCRIBED IN THE SCHEDULE HERETO FOLLOWING INDEMNIFIABLE LOSS OR DAMAGE PROVIDED FOR IN A) ABOVE; AS PREVIOUSLY STATED THE POLICY REQUIRES THAT ANY HIRING AGREEMENT SHALL BE NO MORE ONEROUS THAN THE CPHA CONDITIONS.

50. CONSTRUCTION PLANT INSURANCE � 6HIRED IN/OUT PLANT & MACHINERY THIS PLANT AND EQUIPMENT IS HIRED IN/OUT UNDER SPECIFIC HIRING CONDITIONS. INSURERS PREFER THE CONDITIONS AS PUBLISHED BY THE PLANT HIRE ASSOCIATION KNOWN AS THE CPHA CONDITIONS. THE CPHA CONDITIONS ARE CONSIDERED TO BE THE MOST FAIR FROM BOTH THE OWNER�S AND THE HIRER�S POINTS OF VIEW. IN FACT, A POLICY COVERING HIRED PLANT OFTEN INCLUDES A MEMORANDUN WHICH STATES: �THIS INSURANCE IS BASED ON HIRING AGREEMENTS NO MORE ONEROUS THAN THOSE PUBLISHED BY THE CONTRACTOR�S PLANT HIRE ASSOCIATION, SHOULD PLANT HAVE BEEN HIRED UNDER OTHER HIRING AGREEMENTS THEN ANY LOSS OR DAMAGE COVERED UNDER THIS POLICY WILL BE ADJUSTED AS IF THE CPHA CONDITIONS HAD BEEN IN FORCE�

51. CONSTRUCTION PLANT INSURANCE � 7RISK ASSESSMENT THE INFORMATION REQUIRED EMBRACES THE FOLLOWING: IS THE PLANT OWNED OR HIRED IN; IF HIRED IN, THE APPLICABLE CONDITIONS OF HIRE; THE TYPE OF HIRED IN PLANT AND THE HIRE CHARGE FOR THE PERIOD OF HIRE; WHETHER ANY HIRED IN ITEM HAS A REPLACEMENT VALUE EXCEEDING R------ (NOT ALL INSURERS REQUIRE THIS) FOR OWNED PLANT A FULL SCHEDULE OF PLANT TO BE INSURED AND THE NEW REPLACEMENT VALUE OF EACH ITEM; DETAILS OF TOWER CRANES AND OTHER CRANES OWNED OR HIRED IN TOGETHER WITH COPIES OF THEIR LAST INSPECTION REPORT; WHETHER THERE ARE TO BE ANY TANDEM OR MULTIPLE LIFTS, DETAILS THEREOF,INSURERS RESERVE RIGHT OF EVALUATION; AGE OF ROPES AND SLINGS AND LATEST INSPECTION REPORT; WHETHER LIFTING APPARATUS FITTED WITH LOAD GUAGES; CERTIFICATE OF COMPETENCY OF CRANE OPERATORS; EXPERIENCE OF RIGGERS WHO WILL CONTROL LIFTING; DETAILS OF LOSSES OVER LAST THREE YEARS.

52. CONSTRUCTION PLANT INSURANCE � 8CPHA HIRE CONDITIONS THE FOLLOWING IS A RESUME OF THE CPHA HIRE AGREEMENTS THE HIRER MAY NOT CEDE ASSIGN NOR SUBLET THE AGREEMENT IN ANY WAY; THE OWNER HAS AT ANY TIME THE RIGHT OF ACCESS TO SITE TO EXAMINE THE HIRED-IN PROPERTY; THE HIRER MUST ENSURE THAT OR AT HIS OWN COST CREATE A SUITABLE WORKING TABLE FOR THE SAFE OPERATION OF ANY HIRED IN CRANE, FAILING WHICH THE AGREEMENT SHALL BE NULL AND VOID; THE HIRER IS OBLIGED TO NOTIFY THE OWNER OF ANY DEFECTS IN THE PLANT AT THE TIME OF DELIVERY OR ANY DEFECTS THAT MAY DEVELOP DURING THE HIRE PERIOD, THE PLANT SHALL CEASE TO BE USED, ANY DAMAGE THAT MAY OCCUR DUE TO CONTINUED USE SHALL BE FOR THE COST OF THE HIRER; THE PLANT IS TO BE USED ONLY WITHIN ITS RATED CAPACITY, IN THE CASE OF CRANES NO TANDEM LIFTS, UNLESS AGREED TO

53. CONSTRUCTION PLANT INSURANCE � 9CPHA HIRE CONDITIONS THE OWNER�S OPERATOR BECOMES THE SERVANT OF THE HIRER WHO HAS THE ABSOLUTE CONTROL OF HIS ACTIONS; RISK OF LOSS OR DAMAGE PASSES TO THE HIRER ONLY ON DELIVERY TO SITE UNLESS THE HIRER HAS ARRANGED TRANSIT OF THE PROPERTY TO SITE FROM THE OWNER�S PREMISES IN WHICH CASE THE HIRER IS RESPONSIBLE; THE HIRER INDEMNIFIES THE OWNER FOR ALL LIABILITY ARISING OUT OF THE USE OF THE PLANT BY THE HIRER; THE HIRER SHALL BE RESPONSIBLE FOR ON-GOING HIRE CHARGES DUE TO INCLEMENT WEATHER OR NORMAL MAINTENANCE OR REPAIRING PUNCTURES AND THE LIKE THE HIRER SHALL NOT BE LIABLE FOR ON-GOING HIRE CHARGES DUE TO UNAVAILABILITY OF ANY OWNER�S OPERATOR OR DUE TO BREAKDOWN FROM INHERENT DEFECT; THE HIRER ACCEPTS LIABILITY FOR DIRECT & CONS LOSS

54. CONSTRUCTION PLANT INSURANCE �10CPHA HIRE CONDITIONS THE HIRER IS RESPONSIBLE FOR THE INSURANCE DURING THE HIRE PERIOD; ANY BREACH OF CONDITIONS OF THE AGREEMENT OR ACT OF INSOLVENCY OR BEING PLACED UNDER JUDICIAL MANAGEMENT THE OWNER MAY REPOSSES THE PLANT ON HIRE AND WILL BE ENTITLED TO THE HIRE FEES DUE FOR THE FULL AND UNEXPIRED HIRE PERIOD; IN THE CASE OF CRANES AND MOBILE PLANT HIRE FEES WILL BE BASED ON TIME SHEETS PREPARED BY THE PLANT OPERATOR AND SIGNED BY THE HIRER; THERE IS NO OBLIGATION ON THE OWNER TO SUPPLY SLINGS, IF THESE ARE SUPPLIED NO RESPONSIBILITY IS ACCEPTED BY THE OWNER WHO HAS NO CONTROL OVER USE; TYRES AND TUBES ARE THE RESPONSIBILITY OF HIRER; PLANT MAY BE RECALLED FOR REPAIR BY THE OWNER.

55. EMPLOYER�S LIABILITY - 1 EMPLOYER�S LIABILITY: TO WHOM DO THE EMPLOYERS HAVE A POTENTIAL RESPONSIBILITY TO PAY COMPENSATION FOR INJURIES OR DISEASE DUE TO THEIR OCCUPATION,UNDER WHAT LAW: PRIOR TO 1994 ALL EMPLOYEES EARNING LESS THAN A SPECIFIED AMOUNT, SPECIFIED IN TERMS OF THE WORKMANS COMPENSATION ACT (WCA), WERE CLASSED AS �WORKMEN�. THEY OR THEIR DEPENDANTS COULD CLAIM COMPENSATION UNDER THE ACT, BUT HAD NO LEGAL RIGHT TO SUE THEIR EMPLOYERS; THOSE WORKMEN EARNING IN EXCESS OF THE PRESCRIBED AMOUNT WERE IN TERMS OF THE ACT CLASSED AS �NON-WORKMEN� �NON WORKMEN� WERE PRECLUDED FROM CLAIMING COMPENSATION FOR OCCUPATIONAL INJURIES OR DISEASE, UNDER THE WORKMAN�S COMPENSATION ACT, BUT WERE ABLE TO CLAIM COMPENSATION FROM THEIR EMPLOYERS FOR SUCH INJURIES OR DISEASE, ACCORDINGLY, MOST EMPLOYERS TOOK OUT EMPLOYER�S LIABILITY INSURANCE

56. EMPLOYER�S LIABILITY - 2 IN 1994 THE COMPENSATION FOR OCCUPATIONAL INJURIES AND DISEASES ACT (130 OF 1993) WAS PROMULGATED, COMMONLY KNOWN AS THE �COID ACT�; IN TERMS OF THE ACT ALL EMPLOYEES (THE BENEFITS ARE �PEGGED� TO BE A DEFINED INCOME LEVEL) AND PRECLUDES EMPLOYEES FROM CLAIMING COMPENSATION FROM THEIR EMPLOYERS FOR INJURIES OR DISEASE ARISING OUT OF THEIR OCCUPATION, ONLY IN EXCEPTIONAL CASES WHERE EMPLOYMENT IS NOT CLASSIFIED AS �EMPLOYEES� ARE THEY FREE TO SUE THEIR EMPLOYER FOR COMPENSATION UNDER COMMON LAW FOR SUCH INJURIES OR DISEASES; THE �COID ACT� DEFINITION OF �EMPLOYEE� INCLUDES APPRENTICES AND LEARNERS, BUT NOT THOSE CONTRACTED TO CARRY OUT WORK FOR THE EMPLOYER OR THEIR SUB-CONTRACTORS; CONSEQUENTLY EMPLOYERS LIABILITY CLAIMS ARE RARE

57. EMPLOYER�S LIABILITY - 3 UNDER A MODERN EMPLOYER�S LIABILITY POLICY, DEATH AND BODILY INJURY INCLUDES DISEASE OR ILLNESS. THIS COVER IS UNLIKE PUBLIC LIABILITY POLICIES IN THAT PROPERTY DAMAGE IS NOT INCLUDED; IT IS IMPORTANT TO UNDERSTAND THAT UNDER THE USUAL EMPLOYERS LIABILITY, INJURY OR ILLNESS MUST OCCUR DURING THE PERIOD OF INSURANCE. THE CLAIM MAY BE MADE AND THE INSURER�S LIABILITY ARISE MANY YEARS AFTER THE CAUSE OF THE ACTION, EVEN AFTER THE ORIGINAL INSURER IS OFF RISK. THIS EQUATES TO A CLAIMS INCURRED WORDING. THE INSURER WHO WAS ON RISK AT THE TIME THE CAUSE OCCURRED IS THE INSURER RESPONSIBLE FOR THE CLAIM.

58. EMPLOYER�S LIABILITY - 4 IT IS RECOMMENDED THAT THIS CHAPTER (8) OF THE IISA CONSTRUCTION INSURANCE STUDY BOOK BE CAREFULLY READ THE COID ACT PROVIDES FOR COMPENSATION FOR DISABLEMENT CAUSED BY OCCUPATIONAL INJURIES OR DISEASES SUSTAINED OR CONTRACTED BY EMPLOYEES IN THE COURSE OF THEIR EMPLOYMENT, OR DEATH FROM SUCH INJURIES OR DISEASE. DISABLEMENT INCLUDES CONVENTIONAL BODILY INJURY UNDER A CONVENTIONAL EMPLOYER�S LIABILITY POLICY; DISABLEMENT AS DEFINED BY COID MEANS TEMPORARY PARTIAL DISABLEMENT TEMPORARY TOTAL DISABLEMENT, PERMANENT DISABLEMENT OR SERIOUS DISFIGUREMENT; COID AFFORDS A MORE COMPREHENSIVE COVER THAN A NORMAL EMPLOYER�S LIABILITY POLICY. UNDER AN EMPLOYER�S LIABILITY POLICY, THE EMPLOYER HAS TO BE NEGLIGENT BEFORE A VALID CLAIM CAN ARISE. COID DOES NOT REQUIRE NEGLIGENCE ON THE PART OF THE EMPLOYER. IT IS SUFFICIENT FOR THE DISABLEMENT TO BE AS A RESULT OF AN ACCIDENT NOT NECESSARILY DUE TO NEGLIGENCE. THUS COID HAS A WIDER APPLICATION.

59. PROJECT 3TO BE PRESENTED AT NEXT SESSION An Employee, let us call him Joe, while working on a machine in the production shop and, not wearing a safety belt slips and falls to the ground some 4 metres below and breaks his leg, it is a compound fracture. He is incapacitated for six weeks while the bone heals, he cannot attend work, but returns to work at the beginning of the seventh week, although, the sore on his leg has not completely healed. Some three weeks later, when the sore still has not healed he visits his Doctor again and the Doctor identifies that gangrene has set in and is at an advanced stage, unfortunately, the only remedy is to amputate his leg. How will he be compensated under the Coid Act, would he have been treated any different under a Employer�s Liability Policy? What would the Coid Act Commissioner say about the lack of Safety belt?

60. PROFESSIONAL INDEMNITY INSURANCE1 THIS IS A CLASS OF LIABILITY INSURANCE; THE LAW RELATING TO DEFECTS IN BUILDINGS AND STRUCTURES AS WELL AS THAT RELATING TO ECONOMIC LOSS HAS BECOME ONEROUS TO CONTRACTORS, ENGINEERS, ARCHITECHTS, SURVEYORS AND OTHER PROFESSIONALS; AS A CONSEQUENCE PROFESSIONAL INDEMNITY INSURANCE HAS BECOME OF GREAT SIGNIFICANCE TO PROFESSIONAL BODIES; THE COVER IS ON A CLAIMS MADE BASIS IN OTHER WORDS IF A CLAIM IS FIRST MADE AGAINST AN INSURED SOME TIME AFTER THE OCCURRENCE OF THE EVENT THAT GAVE RISE TO THE CLAIM, THEN THE INSURER WHO IS CURRENTLY ON RISK SHALL BECOME LIABLE TO INDEMNIFY THE INSURED FOR THE CLAIM

61. PROFESSIONAL INDEMNITY INSURANCE2 THE PRIMARY FUNCTION OF THE POLICY IS TO PROVIDE FOR FINANCIAL OR ECONOMIC LOSS IN OTHER WORDS LOSSES NOT ACCOMPANIED BY PHYSICAL DAMAGE OR BODILY INJURY; IT IS IMPORTANT TO FULLY DESCRIBE ALL THE ACTIVITIES OF THE INSURED IN THE RECITAL CLAUSE AS THE INDEMNITY APPLIES TO THE STATED BUSINESS AND NO OTHER FOR EXAMPLE �DESIGN AND CONSTRUCT CONTRACTORS�, ARCHITECHTS, DESIGN ENGINEERS ETC.; IT IS A LEGAL LIABILITY POLICY, THUS THE INSURER�S OBLIGATION TO INDEMNIFY ONLY BECOMES PAYABLE ONCE THE INSURED HAS BEEN FOUND TO BE LEGALLY LIABLE; PROFESSIONAL INDEMNITY IS NOT A CONTRACT BASED ON MORAL OR COMMERCIAL CONSIDERATIONS

62. PROFESSIONAL INDEMNITY INSURANCE3 COVER IS BASED ON BREACH OF PROFESSIONAL DUTY; THE CLAIM HAS TO BE MADE (AS PREVIOUSLY DISCUSSED) DURING THE PERIOD OF INSURANCE; COVER ENVISAGES CLAIMS ARISING OUT OF �NEGLIGENT ACTS, ERRORS OR OMISSIONS� THESE WORDS HAVE NEVER BEEN DEFINED, SOME LEGAL CASES TAKE THE VIEW THAT THEY REFER TO NEGLIGENCE ONLY, THERE ARE, OF COURSE, OTHER INTERPRETATIONS; IN THE CASE WIMPY CONSTRUCTION UK LTD. VS POOLE(1984) IT WAS HELD THAT THE TERM� OMISSION ERROR OR NEGLIGENT ACT� COVERED AN OMISSION OR ERROR WITHOUT NEGLIGENCE, EVEN THOUGH AN ANCILLARY CLAUSE IN THE POLICY REFERRED TO NEGLIGENT ACT, ERROR OR OMISSION

63. PROFESSIONAL INDEMNITY INSURANCE4 THE DESIGN AND CONSTRUCT POLICY WORDING EXCLUDES ANY LIABILITY ARISING DUE TO THE INSURED (CONTRACTOR) HAVING GIVEN AN EXPRESS WARRANTY OR GUARANTEE THAT INCREASES THE INSURED�S LIABILITY. THIS EXCLUSION DOES NOT APPLY TO LIABILITY WHICH WOULD HAVE ATTACHED IN THE ABSENCE OF SUCH EXPRESS WARRANTY OR GUARANTEE; THE P.I. POLICY REFERS NOT ONLY TO THE INSURED NAMED IN THE SCHEDULE , BUT ALSO TO PREDECESSORS IN BUSINESS OR ANY EMPLOYEE OF THE INSURED; WHEN BUSINESSES AMALGAMATE OR SPLIT UP, THE APPLICATION OF THE PREDECESSORS TO BUSINESS CLAUSE CAN GIVE RISE TO DIFFICULTIES; WHERE THERE HAS BEEN A RECENT AMALGAMATION OR SPLIT IT IS IMPORTANT TO ASCERTAIN EXACTLY WHAT THE LIABILITIES OF THE NEW AND OLD BUSINESSES ARE.

64. PROFESSIONAL INDEMNITY INSURANCE5 NEGLIGENCE BY EMPLOYEES OF THE INSURED OR EMPLOYEES OF PREDECESSORS IN BUSINESS IS ALSO COVERED. MISTAKES BY EMPLOYEES ARE THE MOST FREQUENT CAUSE OF CLAIMS UNDER A P.I. POLICY; THE P.I. POLICY ALSO PROTECTS THE INSURED AGAINST ANY LIABILITY HE MAY INCUR ARISING OUT OF THE USE OR EMPLOYMENT OF AGENTS; THIS SUBJECT IS MAINLY A PUBLIC LIABILITY COVER AND WILL BE COVERED MORE EXTENSIVELY BY THE PUBLIC LIABILITY COURSE, WE THEREFORE, DO NOT INTEND TO GO FURTHER INTO THIS SUBJECT.

65. BUILDING DEFECTS INSURANCE1 OTHERWISE KNOWN OVERSEAS AS DECENNIAL LIABILITY; IT HAS ITS ORIGINS IN NAPOLEONIC LAW; IT ONCE AGAIN GAINED POPULARITY AFTER THE FIRST WORLD WAR WHEN CONSIDERABLE CONSTRUCTION WAS TAKING PLACE IN EUROPE; THE POLICY COVERS INHERENT DEFECTS IN BUILDING STRUCTURES WHICH ONLY BECOME MANIFEST AFTER THE COMPLETION OF CONSTRUCTION, WHERE THIS THREATENS THE STABILITY OF THE STRUCTURE DUE TO DESIGN PLAN SPECIFICATION MATERIALS OR WORKMANSHIP LANDSLIP SUBSIDENCE OR HEAVE IS ALSO COVERED; THE COVER IS BASED ON THE DESIGN PLAN AND SPECIFICATION BEING FULLY DIVULGED TO INSURERS FOR APPROVAL BY THEIR CONSULTANTS AND THAT GEOTECHNIC AND HYDROLOGY TESTS ARE CARRIED OUT ON THE SITE AND THE RESULTS ARE GIVEN TO INSURERS FOR APPROVAL COVER MUST BE APPLIED FOR BEFORE COMMENCEMENT

66. BUILDING DEFECTS INSURANCE2 THE PRIMARY COVER EXCLUDES WATERPROOFING OF THE BUILDING ENVELOPE, HOWEVER, THIS DOES NOT EXCLUDE DAMAGE TO THE STRUCTURE AS A CONSEQUENCE OF FAULTY WEATHER PROOFING; INSURER�S CONSULTANTS MUST BE GIVEN ACCESS TO SITE THROUGHOUT THE CONSTRUCTION PERIOD; AFTER PRACTICAL COMPLETION A FURTHER INSPECTION OF THE ASPECTS THAT REQUIRED RECTIFICATION OR ATTENTION, ONCE SATISFACTORY COMPLETION HAS OCCURRED, BUILDING DEFECTS COVER CAN BE CONFIRMED; COVER GENERALLY EXCLUDES FIRE AND ALLIED PERILS, DAMAGE DUE TO ALTERATIONS, MODIFICATIONS OR EXTENSIONS INADEQUATE MAINTENANCE OR WHERE THE DESIGN LOAD HAS BEEN EXCEEDED; THIS COVER DOES NOT TAKE PRECEDENCE TO THE MAINTENANCE COVER AFFORDED BY THE CONSTRUCTION POLICY.

67. CONSEQUENTIAL LOSS DUE TO CONSTRUCTION ACCIDENTS THERE ARE A VARIETY OF CONSEQUENTIAL LOSS COVERS THAT MAY BE TRIGGERED BY CONSTRUCTION RISKS, BOTH THE EMPLOYER AND THE CONTRACTOR CAN BE EXPOSED TO LOSSES AS A RESULT OF CONSTRUCTION ACCIDENTS; THE COVERS ENVISAGED ARE: INCREASED COST OF WORKING � CONTRACTORS, ADVANCE LOSS OF RENT � EMPLOYERS AND DEVELOPERS, ADVANCE LOSS OF INTEREST � EMPLOYERS AND DEVELOPERS, ADVANCE PROFITS/DELAYED START UP.- EMPLOYERS WE WILL EXAMINE EACH OF THESE INDIVIDUALLY

68. INCREASED COST OF WORKING ACCIDENTS ON SITE CAN CAUSE DELAYS IN COMPLETION OR EVEN IN A WORST CASE SCENARIO THE TOTAL LOSS OF CONSTRUCTED WORKS, SAY BY FIRE OR FLOOD ETC. ACCORDINGLY THE CONTRACTOR MAY BE AT A LOSS DUE TO HAVING TO CONTINUE TO REMUNERATE WORKERS AND PAY CONTINUING HIRE CHARGES FOR PLANT AND MACHINERY DAMAGED IN THE EVENT. THE CONTRACTOR WILL AS A RESULT BE OUT OF POCKET AS HE WILL NOT BE ABLE TO RECOUP THE INCREASED COSTS. COVER FOR SUCH LOSSES IS AVAILABLE IN THE MARKET BUT SUBJECT TO A TIME EXCLUSION AND INDEMNITY PERIOD, THE PREMIUM CHARGE IS NOT CHEAP.

69. ADVANCE LOSS OF RENT OR INTEREST THIS COVER IS MAINLY DIRECTED AT EMPLOYERS, BEING PROPERTY OWNERS OR DEVELOPERS, WHO MAY SUFFER RENT LOSSES DUE TO DELAYED OR NON COMPLETION OF THE WORKS. PART OF THE FEASABILITY STUDY BEFORE ENTERING INTO ANY CONTRACT FOR CONSTRUCTION, OR EVEN PURCHASING THE LAND, THE EMPLOYER EVALUATES THE OVERALL COST TO HIM AND AT WHAT POINT HE WILL START TO RECEIVE EARNINGS FROM HIS INVESTMENT. IT MUST BE REMEMBERED THAT HE IS EITHER USING HIS OWNN FINANCE OR HE IS TAKING OUT LOANS TO COVER THE COST OF DEVELOPMENT IN EITHER CASE HE IS EITHER LOSING INTEREST ON VESTED CAPITAL OR HE IS PAYING INTEREST ON THE LOAN. THE CONSTRUCTION PERIOD IS THUS VITAL TO HIS POTENTIAL COST

70. ADVANCE PROFITS OR DELAYED START-UP - 1 THIS COVER IS ALLIGNED MAINLY TO PRODUCTION PROCESSES. INVESTORS WHO PUT MONEY INTO A VENTURE DO SO FOR THE PURPOSE OF INCREASING THEIR WEALTH THROUGH SUCH INVESTMENT, ACCORDINGLY, THEY EXPECT THE EARNINGS OF THE VENTURE TO COMMENCE ON SCHEDULE; THE VENTURE MAY BE AN INDUSTRIAL MANUFACTURING PROCESS, MINING OR A CHEMICAL OR PETRO-CHENICAL FACILITY; IRRESPECTIVE OF THE NATURE OF THE VENTURE, WHEN THE OPERATIONS RUN LATE, THIS BRINGS ABOUT AN UNEXPECTED LOSS TO THE INVESTOR. HAPPILY, HE CAN INSURE AGAINST THIS EVENTUALITY UNDER AN ADVANCE PROFITS POLICY; THE ADVANCE PROFITS POLICY IS ONLY TRIGGERED BY AN INDEMNIFIABLE EVENT UNDER THE CONSTRUCTION POLICY.

71. ADVANCE PROFITS OR DELAYED START-UP - 2 THE SUM INSURED UNDER THIS POLICY IS A FIXED AMOUNT BASED ON THE EXPECTED EARNINGS OF THE BUSINESS DURING THE PERIOD OF INDEMNITY SAY 12 MONTHS, THE COVER IS SUBJECT TO AVERAGE. THERE IS, HOWEVER, A DEDUCTIBLE APPLICABLE TO THE INDEMNITY, THIS IS A TIME EXCLUSION WHICH IS USUALLY QUITE LENGTHY FOR COMPLEX PRODUCTION PROCESSES AND MINING, THIS COULD EXTEND TO THREE MONTHS, MOST STANDARD TRIED AND TESTED PROCESSES WOULD HAVE A 1 TO 3 WEEK EXCLUSION PERIOD, BUT NEVER LESS THAN 3 DAYS. SOME PROCESSES SUCH AS PETRO-CHEMICAL RISKS HAVE AN EXCLUSION OF COVER DURING THE FIRST 7 DAYS OF TESTING, IN OTHER WORDS ANY ACCIDENT OR FAILURE DURING THE FIRST 7 OPERATING DAYS, WHILE COVERED UNDER THE WORKS POLICY WOULD NOT QUALIFY FOR INDEMNITY UNDER THE ADVANCE PROFITS POLICY.

72. ADVANCE PROFITS OR DELAYED START-UP - 3 CLEARLY, THE COVER MUST BE BASED ON A REALISTIC COMPLETION DATE (DATE ON WHICH COMMERCIAL PRODUCTION IS EXPECTED TO COMMENCE). THE CLIENT HAS AN OBLIGATION TO KEEP THE INSURER INFORMED ON OCCURRENCES AND EVENTS THAT MAY HAPPEN OR OCCUR THAT WOULD DELAY OR RETRACT THE COMPLETION DATE, THUS AFFECTING THE COVER UNDER THE POLICY. THE INSURER IS GIVEN ACCESS TO THE CONSTRUCTION SITE AT ANY REASONABLE TIME TO ENSURE THE WORK IS BEING UNDERTAKEN UNDER GOOD ENGINEERING PRACTICES AND TO QUANTIFY THE COMPLETION DATES OF INDIVIDUAL COMPONENTS AND THE INTEGRITY OF THE PROJECT AS A WHOLE. THE INSURER ALSO HAS THE RIGHT TO TAKE OVER AND CONTROL ANY REPAIR OR REPLACEMENT PROCEDURE TO ENSURE THAT THE WORK IS UNDERTAKEN EXPEDITIOUSLY AND TO PROPER STANDARDS OF ENGINEERING EXCELLENCE.

73. BONDS - 1 CONTRACTORS ARE INVARIABLY REQUIRED TO PROVIDE CERTAIN TYPES OF BOND OR GUARANTEE. THE PROVIDERS OF THESE BONDS OR GUARANTEES ARE EITHER A BANK OR INSURANCE COMPANY. THE MOST USUAL BONDS ARE: PERFORMANCE BONDS: THIS IS ONE OF THE MOST IMPORTANT BONDS GIVEN BY A CONTRACTOR, IT IS FURNISHED BY THE CONTRACTOR BEFORE THE START OF THE CONTRACT. ITS SOLE PURPOSE IS TO PROTECT THE EMPLOYER AGAINST BREECH OF CONTRACT BY THE CONTRACTOR; BID OR TENDER BOND: THIS BOND IS SUBMITTED BY THE CONTRACTOR WITH HIS BID OR TENDER, THUS SHOWING THE EMPLOYER THAT HIS BID IS REASONABLE AND IF ACCEPTED THE CONTRACTOR WILL SIGN A CONTRACT TO PERFORM THE WORK INCLUDING ANY BOND REQUIREMENTS. THE BOND IS FORFEITED IN FAVOUR OF THE EMPLOYER IF THE CONTRACTOR FAILS TO PERFORM THE WORKS SPECIFIED IN THE TENDER

74. POINTS TO BE AWARE OF � 1SITE PREPARATION AND CLEARANCE SOUNDS QUITE INNOCUOUS DOESN�T IT??? NOT TOO SERIOUS IF IT INVOLVES REMOVAL OF UNDERGROWTH AND THE LIKE FOR THE MAKING OF A ROAD; WHAT IF THE SITE CLEARANCE EMBRACES BUILDING DEMOLISHMENT OR MACHINERY DISMANTLING OR REMOVAL?? SAY FOR EXAMPLE THE BUILDINGS WERE PREVIOUSLY USED FOR THE MANUFACTURE OF CHEMICALS OR THE MACHINERY WAS THAT OF A PETRO-CHEMICAL WORKS, HOW ABOUT A TANK FULL OF INFLAMABLE MATERIALS, NOW THE POSSIBILITY OF LOSS OR DAMAGE OR LIABILITY BECOMES QUITE SERIOUS HOW ABOUT THE CONTRACTOR�S WORKERS THEY TOO ARE AT RISK; SHOULD A REQUEST FOR SITE PREPARATION AND CLEARANCE COVER BE RECEIVED, INVESTIGATE FULLY THE EXTENT THEREOF AND UNDERSTAND THE RISKS INVOLVED.

75. POINTS TO BE AWARE OF � 3HIGH RISE BUILDINGS THE NUMBER OF BASEMENTS � REMEMBER THE DEEPER THE EXCAVATION THE GREATER THE RISK OF COLLAPSE AND REMOVAL OF SUPPORT TO ADJACENT PROPERTY; WHAT SUPPORT WILL BE INSTALLED TO PREVENT COLLAPSE ASK FOR DETAILS OF THE NATURE OF TEMPORARY AND PERMANENT SUPPORT, HAVE BOREHOLES BEEN SUNK TO ESTABLISH THE LEVEL OF THE WATERTABLE AND SITE GEOLOGY ASK FOR COPIES OF REPORTS WHAT IS THE ANTICIPATED VOLUME OF WATER INFLOW? INVESTIGATE THE PUMPING ARRANGEMENTS TO HANDLE THE NORMAL INGRESS OF WATER AND STANDBY PUMPING ARRANGEM, ENQUIRE ABOUT PUMPING ARRANGEMENTS TO HANDLE INCREASED FLOW OF WATER FOLLOWING STORM OR DUE TO INCREASED FLOW OF UNDERGROUND WATER; ENQUIRE ABOUT THE SUPERSTRUCTURE WILL THIS BE STEEL FRAMED OR REINFORCED CONCRETE OR A COMBINATION OF BOTH; REMEMBER, THE GREATER THE NUMBER OF FLOORS THE GREATER THE RISKS, ESPECIALLY THIRD PARTY LIABILIT

76. POINTS TO BE AWARE OF � 2ROAD CONSTRUCTION WHAT IS THE LENGTH OF THE ROAD WILL THE ROAD BE SINGLE OR DOUBLE CARRIAGEWAY OBTAIN DETAILS OF THE LAYERWORKS BASE COURSE PLUS ?? LAYERS AT WHAT INTERVALS WILL THE LAYERWORKS BE SEALED (REMEMBERING ONE BITUMEN TANKER CAN SEAL 1KM OF DOUBLE LANE ROAD) WHAT IS THE NATURE OF THE TERRAIN IT WILL BE CROSSING IS IT GENTLY UNDULATING OR IS THE TERRAIN HILLY WILL THERE BE LARGE CUT AND FILL OPERATIONS WILL THE ROAD CROSS ANY FLOOD PLAINS WHAT STRUCTURES WILL BE CONSTRUCTED IF INVOLVING CULVERTS THE NUMBER NATURE AND SIZE IF BRIDGES ARE TO BE CONSTRUCTED WILL THESE BE CONSTRUCTED BY CONVENTIONAL METHODS OR WILL THEY BE INCREMENTALLY LAUNCHED WILL THE BRIDGES INVOLVE INSTALLATION OF PILES WILL THERE BE ANY RIVER OR OTHER WET CROSSINGS WHAT UNUSUAL HAZARDS MAY BE EXPECTED OR UNUSUAL OPERATIONS

77. POINTS TO BE AWARE OF � 4SHAFT SINKING IS THE SHAFT TO BE VERTICAL OR INCLINE; OBTAIN DETAILS OF THE PRE SINKING EXPLORATORY WORK AND NATURE OF THE SHAFT COLLAR; REVIEW THE GEOTECHNIC REPORT; IDENTIFY ANY AREAS OF POOR ROCK CONDITIONS; REVIEW THE HYDROLOGY REPORT; ASK FOR DETAILS OF THE EXPECTED INGRESS OF WATER; ASK FOR PARTICULARS OF PUMPING ARRANGEMENTS AND DETAILS OF ADDITIONAL PUMPS TO HANDLE AN INCREASED FLOW; ENQUIRE AS TO THE DIAMETER OF THE SHAFT; WILL THE SINKING PROCESS BE BY CONVENTIONAL DRILLING, BLASTING AND GRUBBING? WILL THE SHAFT BE LINED AND AT WHAT POINT WILL THIS OCCUR? IF THERE ARE QUESTIONABLE GEOTECHNIC CONDITIONS ARE THERE ANY PROCEDURES TO PREVENT COLLAPSE?

78. RISK ASSESSMENTSOME CAUSES OF LOSS OR DAMAGE FIRE LIGHTNING EXPLOSION SUBSIDENCE LANDSLIDE COLLAPSE HEAVE EARTHQUAKE WATER DAMAGE WIND FROST AND SNOW FALLING IMPACT OVERTURNING ELECTRICAL OR MECHANICAL BREAKDOWN SEASONAL CHANGE RIOT CIVIL COMMOTION MALICIOUS DAMAGE THEFT OR ANY ATTEMPT THEREAT DEFECTIVE DESIGN PLAN SPECIFICATION OR SUPERVISION

79. RISK ASSESSMENTSOME CAUSES OF LOSS OR DAMAGE SITE HUTS AND STORAGE AREAS These are areas where a variety of claims can arise, such as: Water Damage Fire Theft How and why do these areas promote claims? Storage conditions may not be ideal for water sensitive products such as refractory bricks It is not unusual for site huts to be erected in close proximity to one another thus the spread of fire from one hut to another etc. Small components and Electrical cable are a target for thieves, especially those items that can be sold easily. Even though there is a competent Storeman goods still find their way out of the back door.

80. RISK ASSESSMENTSOME CAUSES OF LOSS OR DAMAGE Fire break Main storage area for small & sensitive items cable drums Steel Engineers� Office Storeman�s office Drawing office

81. RISK ASSESSMENTSOME CAUSES OF LOSS OR DAMAGE no firebreak grass growing up to site huts Site huts in close proximity

82. RISK ASSESSMENTPHYSICAL HAZARDS OF CONSTRUCTION UNDER THIS HEADING WE ARE CONSIDERING THE HAZARDS ASSOCIATED WITH THE CONSTRUCTION OF THE WORKS; CONSTRUCTION INSURANCE EMBRACES A VAST VARIETY OF CONSTRUCTION PROJECTS. THESE INCLUDE: BUILDINGS, WATER TOWERS, CHIMNEY STACKS, COOLING TOWERS, BRIDGES AND THE LIKE; SHAFT SINKING AND EQUIPPING, UNDERGROUND DEVELOPMENT ROADS, TUNNELS, AIRPORT RUNWAYS, RAILWAY LINES ETC.; CROSS COUNTRY AND UNDER SEA PIPELINES, DAMS, HARBOUR WORKS, RESERVOIRS, HYDRO POWER TUNNELS AND VENTS; MAJOR AND MINOR ELECTRICAL AND MECHANICAL WORKS COMPRISING: PETROCHEMICAL WORKS, POWER STATIONS, ENGINEERING MACHINE SHOPS, STEEL SMELTERS AND MILLS, ALUMINIUM SMELTERS ETC SUGAR MILLS, FLOUR MILLING, FROZEN FOODS & OTHER FOOD INDUSTRY RADIO & TELEVISION STATIONS, AIRPORT FLIGHT CONTROL SYSTEMS

83. RISK ASSESSMENT PHYSICAL HAZARDS OF CONSTRUCTION METHODS SOME OF THE MAIN FACTORS AFFECTING RISK, PRIMARILY IN CIVIL AND STRUCTURAL CONSTRUCTION, REVOLVE AROUND SOIL CONDITIONS, HYDROLOGY, ELEMENTAL PERILS AND, OF COURSE, THE QUALITY AND EXPERTISE OF AVAILABLE LABOUR; TURNING NOW TO ELECTRICAL AND MECHANICAL WORKS, PROBABLY THE GREATEST RISKS OCCUR IN HANDLING, ASSEMBLY, INCORRECT ELECTRICAL CONNECTIONS, FAULTY MATERIALS, FAULTY WORKMANSHIP OR DUE TO STORM (WIND); FIRE, LIGHTNING, CARELESSNESS, NEGLIGENCE AND LACK OF SKILL AFFECT ALL MANNER OF CONTRACT WORKS. MANY OF THE RISKS ARE NOT CONFINED TO DAMAGE TO THE CONTRACT WORKS BUT CAN ALSO HAVE THIRD PARTY CONNOTATIONS.

84. RISK ASSESSMENTSOME HAZARDOUS OPERATIONS EXCAVATION AND/OR DE-WATERING � COLLAPSE OF SIDES, AFFECTING THE SITE AND POSSIBLY REMOVING SUPPORT TO ADJACENT PROPERTY � DAMAGE TO WORKS & LIABILITY WELDING - INAPPROPRIATELY CODED WELDER � EXPLOSION AND/OR FIRE � DAMAGE TO WORKS & POSSIBLY INJURY OR DEATH TO MEMBERS OF THE LABOUR FORCE INAPPROPRIATE DESIGN OF TEMPORARY AND PERMANENT SUPPORT � AFFECTING WORKS AND POSSIBLY ADJACENT PROPERTY POURING CONCRETE AT INAPPROPRIATE TIMES � CONCRETE BEING AFFECTED BY FROST OR HIGH TEMPERATURE CRANES NOT BEING SITED ON FIRM GROUND � CRANE & WORKS LACK OF CONTROL WHEN HOISTING PROPERTY BY CRANE � LIABILITY AND WORKS

85. RISK ASSESSMENT SOME HAZARDOUS OPERATIONS PACKING MATERIALS NOT REMOVED FROM THE STRUCTURE SPONTANEOUS COMBUSTION OR A CARELESSLY DISCARDED CIGARETTE CAN START A FIRE; REMEMBER THAT STAIRWELLS AND LIFT SHAFTS CAN CREATE A CHIMNEY EFFECT THUS SPREADING FIRE; IF PVC CLAD ELECTRICAL CABLES HAVE BEEN INSTALLED, THE WATER FROM THE FIREFIGHTING CAN CARRY THE ACID FROM THE BURNING CABLES INTO THE CONCRETE AND SO RENDERING THE CONCRETE POROUS AND INEFFECTIVE AS THE CEMENT HAS BEEN DISSOLVED; CONSTRUCTION NEAR TO WATERWAYS CAN RESULT IN FLOOD OR SUBSIDENCE OR CLAY CONDITIONS SO REDUCING THE SUPPORTIVE CAPACITY OF THE GROUND

86. RISK ASSESSMENTTHE CONSTRUCTION PROCESS INSECURE FOUNDATIONS, IF THE FOUNDATIONS START SUBSIDING THE SUPPORT OF THE BUILDING BECOMES COMPROMISED AND OVER A PERIOD OF TIME THE BUILDING WILL SHOW CRACKS AND IF NOT ATTENDED TO, COLLAPSE CAN OCCUR � STELLENBOSCH BUSINESS SCHOOL; WORK IN HAZARDOUS AREAS SUCH AS CHEMICAL PLANTS CAN RESULT IN FIRE EXPLOSION OR VAPOUR CLOUD IF WORK IS NOT CARRIED OUT IN A MANNER TO AVOID THIS TYPE OF LOSS. (THE FLIXBOROUGH, UK DISASTER); FROM THE FOREGOING IT WILL BE APPRECIATED THAT THE HAZARDS ARE NUMEROUS AND CAN OCCUR AT ANY TIME.

87. CAUSES OF LOSS OR DAMAGE FIRE � GENERALLY DUE TO ACTS OF MAN, SMOKING, WELDING, INFLAMABLE MATERIALS, LACK OF FIREFIGHTING EQUIPMENT LEFT ENERGISED WHEN UNATTENDED - HEATERS; EXPLOSION � BLASTING, TESTING OF MACHINERY, ROGUE PIPES OR TUBES; SUBSIDENCE, HEAVE, LANDSLIP, COLLAPSE, VIBRATION OR UNDERMINING � GENERALLY RELATED TO GEOLOGICAL OR SOIL CONDITIONS, USUALLY FOLLOWING EXCAVATIONS; EARTHQUAKE � THERE ARE MANY KNOWN EARTHQUAKE AREAS AROUND THE WORLD, BUT THE IMPORTANT AREA IN SOUTH AFRICA IS THAT OF THE WESTERN CAPE; WATER DAMAGE � FLOOD, STORM, WATER COURSES, UNDERGROUND WATER, ROADS AND PIPE/CABLE TRENCHES BECOME WATERCOURSES

88. CAUSES OF LOSS OR DAMAGE WIND � THE POTENTIAL FOR WIND DAMAGE IN SOUTH AFRICA CAN BE MANAGED, UNLIKE USA, CHINA, AND MANY OTHER AREAS THROUGHOUT THE WORLD, OUR MOST HAZARDOUS AREAS ARE ADJACENT TO THE COAST; FROST AND SNOW � FROST IS PARTICULARLY DANGEROUS TO FRESHLY LAID CONCRETE, IF PROPER PRECAUTIONS ARE TAKE THE RISKS ARE MINIMISED, FROST AND SNOW ARE PARTICULARLY HAZARDOUS TO MACADEMISED ROAD WORKS ESPECIALLY THE SEALING LAYER IF SNOW OR FROST OCCURS SOON AFTER THE TAR SEALANT HAS BEEN APPLIED � CRUMBLING OF THE TAR WOULD IN ALL PROBABILITY BE THE RESULT; (OR TAMBO 2ND RUNWAY) BREAKDOWN DURING TESTING � USUALLY DUE TO INHERENT DEFECT, FAULTY ERECTION OR INCORRECT WIRING;

89. CAUSES OF LOSS OR DAMAGE FALLING IMPACT OVERTURNING OR OVERBALANCING � THESE PERILS ARE PARTICULARLY HAZARDOUS IN THE HANDLING OF MACHINERY AND COMPONENTS THEREOF OR STRUCTURAL STEELWORK. MOST DAMAGE OCCURS WHEN USING CRANE PLANT; (PIPES BEING HOISTED AT JHB SUN & TOWERS) CRIME RISKS � THEFT AND ATTEMPTED THEFT CAN AND DO OCCUR ON CONTRACT SITES AS FOR ANY OTHER LOCATION, SITE SECURITY NEEDS TO BE OF THE HIGHEST INTEGRITY COLLUSION BETWEEN SITE SUB-CONTRACTORS EMPLOYEES IF NOT CONTROLLED CAN LEAD TO LOSSES ANOTHER PROBLEM IS THAT OF LOCAL CIVICS, ESPECIALLY WHEN THE CONTRACT WORKS SPREADS OVER A LARGE AREA, SAY A ROAD OR RDP HOUSING AND OTHER FACILITIES;((WHEELBARROWS � BRASS FITTINGS(SUGAR MILL) � CIVICS)) DESIGN PLAN AND SPECIFICATION � DESIGN SPECIFICATION REQUIRING PARTICULAR CONSTRUCTION TECHNIQUES WHERE THE CONSTRUCTION METHODOLOGY MAY BE UNKNOWN TO THE CONTRACTOR THUS REULTING IN DAMAGE, SIMILAR CONSIDERATIONS APPLY TO PROTOTYPES EXAMPLE SIGNALLING CABLE SISHEN SALDAHNA RAIL LINE

90. CAUSES OF LOSS OR DAMAGE It can take months from the date of acquiring a green fields site until construction work commences. In many cases, existing buildings on the site have to be demolished before construction work can begin. The construction period for major civil engineering projects, such as freeways and dams, is often between three and five years, whereas the construction and commissioning of a power station can take up to 8/10 years. The following paragraphs outline briefly the nature of each process, each of which has its own potential hazards

91. CAUSES OF LOSS OR DAMAGEDEMOLITION This can take many forms, depending on the nature of the building, its location, and proximity to busy thoroughfares. In some cases, some part of the structure may be left standing, to be incorporated into the new works. This may need special consideration by the contract works underwriter, in view of the usual exclusion of existing structures. Surrey House, M & F Centre � Facades (National Monuments) If the location is remote, the job may be done quickly by the use of explosives. The operatives must be experienced in the use of explosives, and all safety regulations must be complied with. In most cases, the use of explosives, or even mechanical means, is not practical or safe because of the presence of the general public. If the site is in a derelict area, a crane jib and ball can be used to pull down walls, or an earth moving machine with hawser attached can be employed.

92. CAUSES OF LOSS OR DAMAGEDEMOLITION CONTINUED In recent years, it has become fairly common practice to demolish high rise buildings using the implosion method. Highly specialised skills are required, and underwriters will tend to focus on the track record of the demolition contractors, and any deviation from the techniques successfully used by them in the past. As this type of operation normally takes place in heavily built-up areas, the contractor needs to obtain the full co-operation of the authorities and traffic police to warn and safeguard the occupants of surrounding buildings and the general public. In addition, steps are generally necessary to provide physical protections for the buildings closest to the contract site. (Matla Chimney Stack)

93. CAUSES OF LOSS OR DAMAGEDEMOLITION CONTINUED Underwriters need to protect their interests by employing a suitably qualified structural engineer to evaluate the methods and techniques to be used by the demolition contractor. Such engineers, in conjunction with the demolition contractor�s engineer, should undertake a survey of buildings in the explosion zone of the demolition to establish existing cracks and other defects, photographs should be taken as evidence. Protective covers should be placed over air conditioning intakes of adjacent buildings (within the dust zone). (Customs House, Johannesburg)

94. CAUSES OF LOSS OR DAMAGEGROUND WORKS Ground work differs from all other construction work in that very little is constructed. The insurer must remember that the prime purpose of the work is the excavation of material to form spaces and, if they are refilled by accident, considerable expenditure may be necessary to re-excavate the space. The work involved may be sub-divided into: earth moving such as cut and fill operations or fill only operations; mass excavation can form part of a construction contract, or be let as a separate contract, or as a main sub-contract where the sub-contractor may or may not be required to arrange his own insurance. trenching or water diversionary works including canalising of waterways; tunnelling and shaft sinking which may embrace underground development works); piling. Let us look at each process separately.

95. CAUSES OF LOSS OR DAMAGEEARTHMOVING Earth moving normally forms part of a major project such as road building or may be the preliminary to the construction of a large industrial complex or power plant. Earth moving will also form a large part of the work involved in the construction of an earth embankment dam. In most African countries, the major risk in this type of work is the removal of construction material by heavy rainfall or flooding, particularly in the case of large road projects, where the logistics and cost of replacing the material can be time consuming and costly and involve considerable labour and plant usage. NATAL NORTH COAST HOUSING TERRACES WASHED AWAY The cost of salvaging and repairing large and expensive items of plant that have been flooded can also result in substantial claims, usually under a plant insurance policy. Koeberg scrapers

96. CAUSES OF LOSS OR DAMAGEMASS EXCAVATION Mass excavation is normally associated with foundation works or the construction of basements utilising methods (including dewatering) already described. In all cases, except shallow excavations where the soil conditions allow the use of a reasonably unsupported batter (slope), some support to the sides of the excavation will be necessary. Concrete diaphragm wall constructions in a bentonite slurry, or walls of close concrete piling constructed before excavation begins should be self supporting. In the case of sheet steel pile cofferdams, within which excavation is to take place, there is always the risk of some instability. This may be caused by not driving the piling to a sufficient depth so that the toe is uncovered during excavation, by the flow of ground water scouring beneath the toe, or by ground or ground water pressure where no walling beams and cross strutting have been employed in a single skin cofferdam.

97. REMOVAL OF SUPPORT IF LATERAL (SIDEWAYS) SUPPORT IS REMOVED, THE BUILDING WILL SLIDE INTO EXCAVATION, HOWEVER, IF VERTICAL SUPPORT IS REMOVED THEN THE BUILDING WILL COLLAPSE INTO THE EXCAVATION. REMOVAL OF LATERAL SUPPORT GROUND AND BUILDING WILL COLLAPSE OR SLIDE EXCAVATION REMOVAL OF VERTICAL SUPPORT GROUND WILL COLLAPSE INTO EXCAVATION WITH BUILDING THUS WE SHOULD TALK ABOUT �REMOVAL OF SUPPORT� AND NOT �REMOVAL OF LATERAL SUPPORT�

98. CAUSES OF LOSS OR DAMAGEMASS EXCAVATION Whatever the method of supporting the sides of the excavation, however, there is always the risk of inundation due to heavy rain or floodwater, or the complete breakdown of the dewatering pumps. Deep excavations may require complex internal strutting and other support work resulting in a considerable restriction of the operational area. As a consequence, there is a distinct possibility of damage to these temporary works arising from the use of constructional plant or during further excavation. Such damage could be costly to repair by reason of additional expense in the avoidance of further damage in the course of restoration or by the debris-removal operations being extensive. A careful assessment should be made of the total value of the constructional plant which may be in use within the excavation at any one time. LUDERITZ HARBOUR � WAVE SWELLS +5M DESIGNED FOR SWELLS OF -3M SHEET PILES LOOSENED AND COLLAPSED

99. CAUSES OF LOSS OR DAMAGETRENCHING As with mass excavation, the main hazards with trenching are collapse of the sides or inundation of the trench. Frequently, trench collapses are caused by the complete absence of shoring and strutting to the trench sides because of the firm cohesive nature of the soil in which the trench is excavated. However, these soils are liable in abnormal weather conditions to become unstable and collapse. Trenches may also become filled with water, snow, sand, dust, mud and other detritus requiring careful re-excavation or dewatering. In view of the seriousness of the hazard in such work, the insurers may wish to impose a warranty as to the maximum length of trench exposed at anyone time. LAW REQUIRES TRENCH +1M TOBE BRACED

100. TRENCHES FOR PIPES OR CABLES When trenches are excavated during or near to the Rainy season it is recommended that the trench sides are shored up or supported to prevent collapse SHORING

101. SHAFT SINKING

102. CAUSES OF LOSS OR DAMAGESHAFT SINKING Trial bore holes along the route will only give a partial indication of the hazards to be met. More accurate hydrology and geological information will be gleaned by radial drilling (probing ahead of the working face), thus identifying the exact nature of ground conditions and expected water conditions before driving the next stage of the excavation. Although there are always inherent risks in the use of explosives and working below ground level, the results of any serious difficulties are likely to be more expensive to the contractor in terms of delay and remedial works than to the insurer in terms of a claim. The insurer will, however, need to consider such delay if his policy should contain a consequential loss section (advance profits or delayed start-up) The presence of ground water or water bearing strata may be dealt with either by the method of freezing the surrounding areas using refrigeration pipes, or by curtain grouting in advance of tunnelling operations Curtain grouting, if effectively carried out, has the advantage of being a permanent protection, whereas any breakdown in the refrigeration process could result in the flooding of the tunnel. It is normal for the tunnel lining to be constructed as the tunnelling proceeds and there is always the possibility of damage to this lining if inadvertently too large an explosive charge is used. DU TOIT�S KLOOF TUNNEL � MUD RUSH � FREEZING MUD TO CONTINUE EXCAVATION � NO CLAIM PRINCIPAL�S COST

103. CAUSES OF LOSS OR DAMAGESHAFT SINKING Shaft-sinking is generally associated with mining operations, which, because of the vast depths to which they now mine mainly gold (up to and in excess of 3 kilometres, there are now plans to sink shafts to 4 kilometres) requiring highly specialised skills. The development of a mine can include vertical and incline shafts as well as horizontal and incline tunnels. These shafts are generally sunk from the surface, however because of the great depths to which mining operations are now carried out it is usually more advisable to develop sub-vertical or sub-incline shafts at a point considerably below ground level to minimise the drop from surface to the shaft bottom, thus eliminating stretching the rope and causing bounce.

104. CAUSES OF LOSS OR DAMAGESHAFT SINKING Shafts are not only excavated by drilling, blasting and grubbing but can also be excavated by raise-boring, which also has its dangers. Experience has shown that the most effective size of a raise-bore is 6 metres (diameter) or less. This type of operation requires very specific geologic investigation as well as hydrology identification as the work will be undertaken in virgin ground with little or no knowledge of the ground conditions.

105. CAUSES OF LOSS OR DAMAGE SHAFT SINKING CONTINUED There are certain terms and exceptions usual to this type of risk due to the nature of the unknowns of the geology and hydrology of the area. For example, the Western area of Gauteng is mainly a dolomite area, which acts as a sponge full of water due to all the voids, cracks and fissures. It is quite amazing when boring in to this rock as to the amount of water that can flow. Accordingly, the underwriter must be aware of the risks to limit or exclude if he is to write risks in this area. In a like manner there are many other areas in South Africa that have peculiar rock strata that need to be addressed, the risks become more extensive when underwriters expand their horizons into Africa, where the geological and hydrology conditions are unknown. SOUTH DEEP SHAFT FILLED TO ABOUT 250/300M IN LESS THAN AN HOUR. GROUTING & FITTING AND REMOVING PLUG

106. CAUSES OF LOSS OR DAMAGE SHAFT SINKING CONTINUED The usual conditions to be included in insurance policies covering shaft sinking are: (a) a requirement for radial drilling (probing) ahead of the working face; (b) excluding the pumping of water or damage due to the quantity of water in-flow exceeding that which was established during investigations by test-boring in the area of the excavation; (c) the cost associated with fitting and removing a concrete plug to stem the flow or ingress of water into the excavation works; (South Deep Shaft) (d) to exclude the cost of restoring the designed diameter (neat line) of the shaft due to overbreak (a condition caused by excessive use of explosives or inappropriate drilling of blast holes); (e) restoring collapse exceeding 1 or more metres (at the discretion of the underwriter) from the tangent of the neat lines of the excavation.

107. CAUSES OF LOSS OR DAMAGE SHAFT SINKING CONTINUED It is usual during shaft sinking for unstable rock areas to be reinforced by rock bolts or cable rock ties, sometimes steel mesh is fixed to the bolts or ties, which is then gunited to establish a firm surface, nevertheless, collapses still occur. The cost of reinstating the collapsed material can be fairly expensive and underwriters may wish to limit their financial exposure. Accordingly, it is not unusual for an exclusion to be included in the policy limiting the cost of reinstating the collapsed material to the amount of fill required to reinstate the length of the rock bolt or rock tie.

108. CAUSES OF LOSS OR DAMAGE SHAFT SINKING CONTINUED Shaft sinking is a highly specialised activity and the underwriter who thinks he has the competency to know it all is fooling no one but himself. It is imperative, if one wishes to participate in shaft sinking Insurance, that the underwriter employs an experienced mining consultant to evaluate geotechnical and hydrology investigation reports and then the excavation programme and methodology of work proposals. ORIGINAL POSITION OF SOUTH DEEP SHAFT � COLLAPSE AND RESITING

109. CAUSES OF LOSS OR DAMAGE SHAFT SINKING CONTINUED A tunneling project basically involves the creation of a self-supporting or artificially supported space or void within a section of a ground mass, which prior to excavation was in a stabilised state of local equilibrium. The stresses and pressures disturbed by the excavation will be transferred to the tunnel surfaces. If these stresses or pressures are not effectively relieved or checked, it is inevitable that there will be problems for the contractor and consequently losses for the insurer. Exposure to air, and possibly water, may initiate chemical and other weathering processes not previously present, which lining, grouting and other work must take into account.

110. RISK ASSESSMENTSHAFT SINKING HAZARDS - 1 Although Shaft Sinking has been practiced for more than 100 years, despite considerable development of scientifically based methods of site investigation and design, it remains substantially an art. The success of any shaft sinking project will depend largely upon the accuracy with which the site investigations can predict ground conditions, the adequacy of the consulting engineer's planning and design to meet the actual conditions, and the preparedness and ability of the contractor to deal with the hazards encountered.

111. RISK ASSESSMENTSHAFT SINKING HAZARDS - 2 The prediction of ground conditions is based on careful geological mapping from the surface, and subsurface exploration by boreholes and, in the case of incline shafts by excavating adits at selected points along the shaft route carried out during the planning of the project. Where hazardous ground is predicted, it is now common practice for more detailed exploration to be carried out during construction by probing ahead of the tunnel face with long boreholes. The geological features of the site are among the most important factors in assessing the risk.

112. RISK ASSESSMENTSHAFT SINKING HAZARDS - 3 A shaft sinking project basically involves the creation of a self-supporting or artificially supported space or void within a section of a ground mass, which prior to excavation was in a stabilised state of local equilibrium. The stresses and pressures disturbed by the excavation will be transferred to the shaft surfaces. If these stresses or pressures are not effectively relieved or checked, it is inevitable that there will be problems for the contractor and consequently losses for the insurer. Exposure to air, and possibly water, may initiate chemical and other weathering processes not previously present, which lining, grouting and other work must take into account. The permeability of the ground mass, the water table and variations brought about by temporary surface conditions should be investigated.

113. RISK ASSESSMENTSHAFT SINKING HAZARDS - 4 However, the contractor can rarely be entirely confident as to the conditions expected as local weathered zones, faults, fissures, dykes, discontinuities, aquifers, voids, made up ground and even past mine workings can seriously upset predictions and, with conditions very different from those of the surrounding rock mass, present unexpected hazards of inundations. Especially when compressed air is used, the risks of fire and explosion can be very serious in all shafts

114. RISK ASSESSMENTSHAFT SINKING HAZARDS - 5 The hazards to be expected in shaft sinking are: rockfalls and rockbursts; collapse of tunnel sides; inrush of water; inrush of soil or broken rock; fire and explosion; heave or subsidence of ground surface. In shaft sinking, falls are usually due to broken or crushed rock, often associated with faults. In certain rocks containing expansive clay minerals, enormous pressures, particularly at great depth, can be expected on the shaft sides causing collapse. Below the water table, heavy flows of water and loose materials are usually associated with faulted or broken rock or with cavernous rock such as limestone. Explosive gases are often found in coal-bearing shales. Toxic gases can occur in volcanic rocks.

115. RISK ASSESSMENTSHAFT SINKING HAZARDS - 6 The difficulties of dealing with flooding are greatly increased if the water is encountered at the considerable depths to which many shafts are sunk. Insurers must make appropriate enquiries about provisions for pumping and grouting. The considerable vertical distances involved in this type of shaft sinking can greatly increase the risk of damage to constructional plant, as well as to the works. Any equipment that may be accidentally dropped could easily sustain and inflict considerable damage. Much heavy equipment is used in shaft sinking, for example, the kibbles used for removing rock to the surface may be carrying 15 tonnes or so. With some mines, once the initial sink and shaft collar have been completed and the headgear structure has been built, a sophisticated system for winding can be installed and this usually incorporates many elaborate safety precautions.

116. PILED FOUNDATIONS PILE CAP WEAK GROUND PILES CONCRETE OR STEEL BEARING STRATUM

117. PILED FOUNDATIONS Where the maximum bearing strength of the ground is less than the applied load, subsidence will occur. Some means must therefore be adopted to increase the bearing capacity of the ground and the normal method is to use bearing piles. Bearing piles, as distinct from sheet piles, are nothing more than columns under the ground reaching down to a firm stratum or if this is too deep, relying for their support on the friction grip of the ground (otherwise known as friction piles). The methods of piling and types of bearing pile used are numerous, embracing a number of proprietary systems. However, basically they may be divided into two main types: Driven � steel or concrete Bored - concrete

118. PILED FOUNDATIONS DRIVEN PILES Driven piles or displacement piles as they are sometimes known, are defined as those which displace the ground through which they are being driven. Driven steel piles take the form of steel beams (H piles) or tubes or box sections driven into the ground, the tubes and box sections are usually filled with concrete. H section Steel pile Typical box section steel pile

119. PILED FOUNDATIONS DRIVEN PILES CONTINUED Alternatively the piles may be made of pre-cast concrete, often pre-stressed, suitably strengthened to withstand the blows from the driving hammer. Piles formed by driving pre-cast hollow concrete sections or steel tubes, (either extracted later or left in situ) in which concrete is then used to make up the shaft, these are known as �driven cast-in-situ� piles. Pile driving equipment consists of a piling frame, which has the function of guiding the pile at its correct alignment from first pitching in position to its final penetration, a driving hammer and a multi-drum winch for handling the hammer, lifting a pile and also to operate the travelling, slewing and raking gear on the rig. There are many designs of custom-made driving rigs available.

120. PILED FOUNDATIONS DRIVEN PILES CONTINUED Often piles are driven by means of purpose adapted site cranes on which are mounted �leaders�, which are the essential parts of a piling frame consisting of stiff steel beams usually of channel, box or tubular section. BORED PILES These are formed by boring a hole in the ground and, if necessary, inserting a steel lining (which is often retracted later) to prevent the sides from collapsing. After boring the hole, steel reinforcement is inserted and the hole filled with concrete

121. PILED FOUNDATIONS BORED PILES continued Power driven auger rotary drills are suitable for installing bored piles in clay soils and a wide range of machines are available. For drilling through sands, gravels and loose rock formations, the pile boreholes may require continuous support by means of a casing which is driven to the required depth into the ground and the material within the casing is removed by grabbing or auger drilling tools. Small diameter piles of up to 600mm diameter requiring continuous support by lining tubes (casing) may be bored using simple tripod rigs. The leading tube has a sharpened cutting edge and is driven down under the impact of a heavy drill stem. In clays, the soil which jams inside the tube is prised out by spade when the cutter is raised to the surface; in ground lacking in cohesion the cutter is provided with a flap valve to retain excavated material which is emptied at ground level merely by releasing the flap.

122. PILED FOUNDATIONS PILE CAPS The purpose of a pile cap is to spread the load imposed upon it onto a group of piles so that, as far as possible, the load is shared equally between the piles. A pile cap also accommodates deviations (within specified tolerances) from the intended position of piles and by rigidly connecting all the piles in one group by a massive block of concrete, the ill-effects of one or more less than fully effective piles are overcome by redistributing the loads. A piling contractor�s work is usually confined to the installation of the piles themselves. Cutting them down to level and constructing pile caps is normally undertaken by the main contractor.

123. PILED FOUNDATIONS PILE CAPS CONTINUED Pile caps are constructed in many shapes and sizes, some large and spread over a number of piles e.g. in heavy foundations for reaction vessels in process plants or boiler and generating equipment in power stations, and others quite small supporting single light duty columns or small items of machinery. The minimum number of small diameter piles permitted on an isolated pile cap is three; caps for single piles must be interconnected by ground beams in two directions and for twin piles by ground beams at right angles to the common axis of the pair.

124. PILED FOUNDATIONS PILE CAPS CONTINUED Excavation work for large pile caps is often extensive, as not only may the foundation area be widely spread, it may also be deep with pile cut-off levels several metres below the surface. De-watering may well be necessary and also protection of excavation sides by timbering, trench sheeting or sheet piling.

125. PILED FOUNDATIONS PILE TESTING The test used almost exclusively on sites for checking compliance with specification requirements is known as the maintained load (ML) test in which the load is increased in stages to a multiple of the working load, usually 1,5 times or twice, and the time settlement curve is recorded at each stage of loading and unloading. Pile testing rigs and arrangements take several days to set up and prepare and the test itself takes several days to complete. Failure is relatively rare, but where a test reveals an unsatisfactory condition it is usually a fairly simple matter to drive a replacement pile or piles and modify the pile cap accordingly (such work would not normally be considered indemnifiable under a CAR Policy)

126. CAUSES OF LOSS OR DAMAGEPILING Piling work has already been mentioned briefly, but it is included in the category of ground works because some piles are of such large diameter and depth that they virtually become shafts or deep excavations. Piles in this category would be of cast-in-situ concrete.

127. EXCAVATION AND EARTHWORKS Most construction projects involve excavation and earthworks of some description. These operations, are usually carried out at the beginning of a project or at the commencement of each new construction phase within a project. The green line shows the ground profile before the commencement of earthworks and the blue line shows the required ground profile after the earthworks.

128. EXCAVATION AND EARTHWORKS BULK EARTHWORKS The main purpose of bulk earthworks is to alter the shape of existing ground within the boundary of the site. This is achieved by cutting into higher ground and filling hollows so as to create a new profile on site. The majority of projects commence with a general shaping of the ground before foundation excavations commence. Of course, the filled areas will be compacted to an acceptable density. The larger the site area the greater usually the extent of earthworks, and with long construction sites , e.g. roadworks, earth moving can form a major proportion of the total project.

129. EXCAVATION AND EARTHWORKS EXCAVATIONS FOR TRENCHES AND FOUNDATIONS Excavation involves not only digging a hole or trench in the ground, but also, upholding the sides to prevent collapse. One simple method of preventing collapse is to slope (batter) the sides of an excavation, but this has the disadvantage of using a larger area of ground at the top of the hole which increases disproportionately with every metre of depth. This would not be ideal for foundation excavations as a neat vertical profile is required.

130. CAUSES OF LOSS OR DAMAGEFOUNDATIONS These are intended to carry the weight of a building to the ground on which the building rests in such a way as to avoid uneven settlement of the structure. In the case of high rise buildings, they also act as an anchor to the structure against wind loads. The soil, foundations and superstructure are interrelated, although insurers sometimes consider them separately. In all foundation work, investigation of the ground is an essential prerequisite of sound design.

131. CAUSES OF LOSS OR DAMAGEFOUNDATIONS Preliminary information regarding the subsoil is mostly obtained by trial bore holes the science of soil mechanics - enabling the nature of the soil's strata to be known and assessment of the most satisfactory method of construction to be made. There are many methods available to improve soil stability. Problems with subsequent foundation work are sometimes encountered when patches of unexpected material are found that had not been revealed by the trial bores. Preliminary information regarding the subsoil is mostly obtained by trial bore holes the science of soil mechanics - enabling the nature of the soil's strata to be known and assessment of the most satisfactory method of construction to be made. There are many methods available to improve soil stability. Problems with subsequent foundation work are sometimes encountered when patches of unexpected material are found that had not been revealed by the trial bores.

132. CAUSES OF LOSS OR DAMAGEFOUNDATIONS Where the load on the foundations is high, there is a tendency for the soil beneath to be forced downwards and outwards causing heaving on the surface and allowing the foundations to sink. The depth and type of the foundations should therefore be such that the weight of the soil coupled with the shear resistance of the soil will prevent this from occurring. The foundations for very tall modern buildings can be extremely elaborate and can often be considered as a civil engineering project within a building contract. EAST LONDON HOTEL

133. CAUSES OF LOSS OR DAMAGEFOUNDATIONS CONTINUED Failure of foundations have, however, been known to occur and the cost of rectifying differential settlement to a high rise building can be considerable. Difficulties also arise where the new structure is to be much higher than the surrounding buildings because the new foundations will go considerably below those of adjoining properties with the consequent risk of subsidence and cracking to third party property. Brick buildings can usually tolerate a certain amount of differential movement but rigid monolithic frames or flexible frames with light stone facings are sensitive to movement.

134. CAUSES OF LOSS OR DAMAGEFOUNDATIONS CONTINUED Moisture changes in the ground. These may occur naturally, for example, as a result of changes in the climate or in the water table (the level of standing water in the sub-soil) on reclaimed land, or they may result from a contractor's activities, such as dewatering or the diversion of an underground water course. Such activities in connection with one contract may affect water levels on neighbouring sites. As a result, for example, clay under foundations may dry out and shrink, or ground that supports foundations may be washed away by diverted water. There is also a problem when dry clay becomes moisturised and begins to swell, this may damage foundations due to the heaving effect of the moisturised clay. Insufficient compactness of the ground. Mass movement of ground may take in areas of mining or on filled or made-up ground. STELLENBOSCH BUSINESS SCHOOL General movement. The upper strata of clay soils tend to move downhill on sloping sites and landslips tend to occur on slopes previously considered stable as a result of work carried out on adjoining land. HOTEL BANTRY BAY

135. RISK ASSESSMENTAIRPORTS This work is normally divided into two categories, called land side and air side. Land side work includes the construction, alteration and repair of buildings, the installation and servicing of machinery and other work where there is no possibility of contact with the operation of the aircraft. This work is assessed in the same way as general building work at any other location. Interesting construction method first extension international side OR Tambo Unusual design at some prestige locations around the world can produce construction problems and possibly increase hazards. Airports have also become targets for acts of terrorism and, as a consequence, extension works could be vulnerable to damage.

136. RISK ASSESSMENTAIRPORTS CONTINUED Air side work, however, can include the construction or extension of runways and aprons, the installation of airport lighting or Air Traffic control Systems and the provision of fuelling facilities. The potential third party exposure in these cases requires special consideration. Owing to the increasing weight, value and passenger-carrying capacity of modern jet aircraft FOR EXAMPLE THE AIRBUS A380, the contractor is often asked to obtain a third party policy with an exceptionally high limit of indemnity. The premium for such cover may well be completely disproportionate to the contract price. To assess the risks adequately, the site plan showing the areas of operation and their proximity to the main runways has to be considered in relation to the funnel diagram, showing the maximum permitted angles and heights for aircraft approach

137. RISK ASSESSMENTAIRPORTS CONTINUED Airports are usually built on flat, open ground and are therefore exposed to wind and water damage. Runways and other expanses of concrete are susceptible to frost and snow damage. OR TAMBO 2ND RUNWAY The risk of loss of, or damage to, the works on an airport situated inland during such processes as drainage, grading, laying of aggregate and casting of concrete for the runways may be regarded as normal, but there may also be a high risk of damage to expensive items of constructional plant, such as large paving machines and concrete batching plants.

138. RISK ASSESSMENTAIRPORTS CONTINUED Many airports are built in coastal areas and frequently an extension of the runway to cope with larger and heavier aircraft necessitates work in the sea. Examples of this are Kai Tak Airport, Hong Kong where the runway extension was carried out by means of reclamation in the harbour. Such work is subject to entirely different perils that will be described under Seaworks in later discussions. Entirely new airports constructed on virgin sites present no unusual features until the first runway begins operation, when the risk may be divided into the land side and air side categories described above