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AN INSURANCE OFFICER’S GUIDE TO CONSTRUCTION CONTRACTS

AN INSURANCE OFFICER’S GUIDE TO CONSTRUCTION CONTRACTS. GINNY HOPE. WHEN DO YOU KNOW ABOUT NEW BUILDINGS OR MAJOR REFURBISHMENTS?. At planning or design stage?. Prior to contract issue?. When works start?. When building finished?. The day it burns down?. TODAY’S PROGRAMME.

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AN INSURANCE OFFICER’S GUIDE TO CONSTRUCTION CONTRACTS

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  1. AN INSURANCE OFFICER’S GUIDE TO CONSTRUCTION CONTRACTS GINNY HOPE

  2. WHEN DO YOU KNOW ABOUT NEW BUILDINGS OR MAJOR REFURBISHMENTS?

  3. At planning or design stage?

  4. Prior to contract issue?

  5. When works start?

  6. When building finished?

  7. The day it burns down?

  8. TODAY’S PROGRAMME • DESIGN / PLANNING STAGE • CONTRACT ISSUE • INSURANCE PLACING

  9. DESIGN/PLANNING - Get your insurers involved - Risk aggregation – link bridges? - Compartmentation - Alarms - Sprinklers/gas extinguishment - Cladding materials – combustible? - Bin storage

  10. CONTRACT STAGE • Professional indemnity risks • Who is insuring the works? • How much liability cover? • Who is insuring the existing building? • What about adjacent property? • Advance profits?

  11. SOME CONTRACTS • JCT • GC Works • NEC NB: DIFFERENT VERSIONS OF EACH. BEWARE!

  12. SOME CONTRACTS • JCT - Advantages • Widely used & ‘understood’ • Contractors like it • Lots of case law • Good for minor works and refurbishments

  13. JCT WATCH OUT FOR INSURANCE OF EXISTING BUILDINGS

  14. JCT WATCH OUT FOR JOINT NAMES PROVISIONS

  15. ACTION ON EXISTING BUILDINGS • Delete the Joint names requirement OR • Ask your insurers to include cover e.g. Zurich PART C Works in Progress • Section 2 – Property Insured • Works in Progress • Existing BUILDINGS and their CONTENTS insured under Part A but only during the period in which the BUILDINGS are undergoing alterations or additions including any agreed period for maintenance or making good defects.

  16. JCT WATCH OUT FOR SUB-CONTRACTORS’ WORKS COVER – DEFINED PERILS ONLY

  17. FIRE/LIGHTNING EXPLOSION STORM FLOOD BURST PIPES EARTHQUAKE AIRCRAFT RIOT CIVIL COMMOTION

  18. JCT WATCH OUT FOR ANY 21-2-1 REQUIREMENT

  19. SOME CONTRACTS • GC WORKS • Public sector contract; favours the Employer • Contractors dislike it • Needs modifying to suit HE

  20. GC WORKS • ALTERNATIVES B & C (AVOID JOINT NAMES PL) • NO PROVISION FOR NON-NEGLIGENT COLLAPSE (21-2-1) WATCH OUT FOR

  21. SOME CONTRACTS • NEC • Relatively new – not widely known • Plain English • Little case law yet • Needs adaptation for refurb works

  22. NEC • 80.1 Employer responsible for riot damage • 84.2 Joint names EL/PL • No provision for non-negligent collapse WATCH OUT FOR

  23. INSURANCE PLACING • CONTRACT WORKS • Recommend some automatic provision for small contracts • Don’t forget the terrorism cover • Sum insured • Free issue materials • Any special risks? E.g. water transits • Completion date – when?

  24. CONTRACTOR’S PL & PI • What limit required? • Novation issues (PI) • Collateral warranties?

  25. EXISTING BUILDING • JCT? Do you need joint names cover? • Protecting contents during Works • Sum insured after completion

  26. 21-2-1 • Why needed?

  27. 21-2-1 • Architect may specify requirement • Consider ground conditions, nature of works, neighbouring property/facilities • Limit? • No standard wording for GC Works or NEC

  28. CONCLUSION • Get involved early • Keep checking developments • Diary for completion

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