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NEC3 ECC: Is the Contractor required to procure Professional Indemnity Insurance because he has design responsibility for temporary works?

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We are engaged in an ECC Option D Contract. The Contractor procured and maintains a Professional Indemnity Insurance which also covers his design Subcontractors and consultants. The cost of premium was being reimbursed to him by the Employer.
Note that based on Sub-Clause 84.2 of the Core Clauses PI insurance is not included in the list of insurance the Contractor needs to procure and maintain.
The Project Manager instruct the Contractor to assess the requirement of a PI insurance cover as it may not be necessary because his design responsibility is for Temporary Works only. The Contractor replied that although his design responsibility (including his design Subcontractor and consultants )is temporary in nature they are critical to provide the Permanent Works (i.e sheet piling, excavation etc..) which the Contractor thinks justifies the necessity of the PI insurance cover.
Can the Project Manager instruct the Contractor to stop maintaining the PII cover and the Contractor should require his design Subcontractors and consultants to procure PII for the professional services they are rendering?
asked May 23, 2016 in Risk and Insurance by Roger Blando (1,260 points)  

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In the first instance the costs of any insurance policy you provide is deemed included within the Fee and therefore (unless there is a specific contract amendment) then Employer does not have to pay it as a Defined Cost.

I open to be corrected here but it is my understanding that PII is provided by the Contractor to cover his liability for errors in his design of any elements of the permanent works (i.e. once they are constructed).  I have never come across a situation where PI is required by the Employer for temporary works (of course you may wish to independently procure insurance to cover design issues in your temporary works but that would be your choice).  I suggest that you check the wording of your Contractor's All Risks policy.  If a design error caused a failure in the temporary works that subsequently damaged any permanent works constructed to date then the insurance to cover your liability in the first entry of the Insurance Table in 84.2 (Loss or damage to the works, Plant and Materials) would, I suggest, cover you.  

Be careful though of your policy wording .  It may be worth checking with your brokers to determine what your CAR policy actually covers you for.
answered Jun 22, 2016 by John Rayner (2,580 points)