Can anyone help with this query, please?
Interesting as to why you would want to challenge as to whether the Employer can specify or not, as you are either:
a) in contract, so the insurance requirements in CD1 won’t have come as a surprise and you will / should have allowed for providing it, or you are
b) at tender stage where you will be able to recover the cost of providing project specific insurance through the bid.
If you’re in contract then you could raise the question, but expect a reply asking “on what basis did you price?”, or if at tender stage, why would you want to ask a question that suggests your preference is to pay a level of excess?
Thanks for the reply, MJD. However, neither of your scenarios is correct. My colleagues and I are preparing the tender documents for a large infrastructure D&B Project. While we are preparing the specimen design directly ourselves a separate organisation is preparing the Conditions of Contract using the NEC3. We have now been asked to review the draft Contract Data part one and part two as part of compiling the overall tender package.
The draft Contract Data part one contains the usual statements about the various minimum levels of insurance required. However, the draft then goes on to specify a maximum level of excess the policies can have. In one case the excess is set at zero.
Since the NEC3 ECC does not mention insurance policy excess at any point my query is, is it allowable or logical to include this in CD part one? Would a potential Contractor even be able to get an insurance policy with a zero excess? There are no Z-clauses that make reference to insurance policy excess.
Hi, thanks for adding context.
If there is a separate organisation preparing the conditions then they are in a position to be able to ask their client as to the logic of this decision on the insurance excess, as it’s either a client decision or one they have decided upon unilaterally – they are after all the ones preparing the docs as you have indicated…
It may be a case that the client has concerns should the contractor become insolvent during construction… just speculation.
And yes, insurers will provide project specific policies without an excess but there will be a cost and that cost will be reflected in the tender submission. If it’s disproportionate cost, then expect a number of TQs at tender stage seeking to relax the requirement.
Again, thank you MJD, but this does not address my core query.
My main query is, is it permissible to write in limits on insurance excesses in Contract Data part one?
The ECC (Clause 84.1) talks about providing insurances in the Insurance Table which, in turn, talks about the amounts stated in the Contract Data. There is no mention of the excesses, capped or otherwise in Clauses 84 to 87.
Are the caps on the excesses enforceable simply because they are in CD part one or is it not something that can/should be stated?
Ok, I have not come across any limits in respect of deductibles being written in before, however, (and I stand to be corrected) my interpretation is that the guidance notes state “the events and extent of cover to be effected by the Contractor are as shown in the Insurance Table and detailed in the Contract Data” so if the extent to the cover is to reflect the range over which the insurance extends and that in turn is to reflect a nil deductible then I don’t see why this couldn’t be written as such.
Thanks, MJD.
Does anyone have a similar or opposing view?