NEC ECC: Insurances Post Completion

Our new school has been certified as complete and take over by the client (Local Authority) has occurred. A Defect Correction Period of 21 days is in place. The C has failed to address all Defects within the 21 days but by mutual consent this has been extended. Due to the nature of the project and the limited number of end-user staff (Academy Trust) the client provided site security during evenings a weekends so the C could access the building. The site security ceases upon the 21 days so now I am looking to the C to extend or provide a dedicated site manager who is inducted and familiar with the building. As the site will be unoccupied during the evenings and weekend am I right in expecting the C to manage site security e.g. lock up when he leaves? as well as be responsible for insuring the site when it passes to his hands e.g. 6pm? So in the event he forgets to lock the gates, or laptops go missing or a fire breaks out whilst he is correcting Defects, the client has assurance that it is the C’s insurances that are claimed against - as per cl. 84.2? Effectively, I am trying to explain to the end-user, client and C that because of the C’s failure to correct within 21 days that it his insurance risk whist correcting defects up until the Defects Certificate.

Correcting Defects is part of Providing the Works, as defined under clause 11. Insurances are to be in place up to when the Defects Certificate has been issued.

If any loss or damage occurs, possibly loss of or damage to property (not associated with the works), then this could well be an insurable risk. This could be at ANY time up to when the Defects Certificate is issued, not just during a Defects Correction Period, provided that such loss or damage occured due to a fault of the Contractor and that the matter ia covered under the terms of the policy.

Access to correct Defects after Completion is often an issue which is not addressed within the Works Information / Scope, but as you have highlighted it is something that should be considered to clarify responsibilities at this stage of the project, taking account of the cost issues associated with uncorrected Defects and whether access was given to the Contractor.

Hi Andrew. The C has not corrected the Defects within the DCP but the E has permitted these to overrun until half term on the basis that they are done and that the C arranges for his site manager/security to be keyholder as the school will not be open. Yet, days before the half term the C decides that company policy prevents his site manager from being a keyholder, (due to insurance liabilities) where does the E stand? Must the E provide access during this period?

Under cl 84.2, the C insured against liability for loss of or damage to property…etc

It’s my assumption that if property went missing during the period that the C was correcting Defects eg over a weekend, that the C may be held liable. Is this correct?

Firstly, in response to your first comment, the defects correction period under clause 43.4 (NEC3) commences when the necessary access and use have been provided. This is the same under NEC4.

Any ‘keyholder’ requirements would be part of the arrangements to allow the Contractor access. I am not sure what the ‘insurance liabilities’ may be, although it probably wouldn’t be reasonable or realistic to expect the Contractor to assume liability for the entire buildings and contents within the boundary of a school’s grounds, where access is only required for a particular part.

Note that the Contractor is liable for any ‘activities on the Site’ after take over, which would include correcting Defects, although this specifically relates to the ‘works’.

Any possible claim for loss of property would depend upon the associated definition in the insurance policy, including the amount of deductible, although the policy is in joint names. It would also need to be caused by ‘activity in connection with this contract’.