This topic is for all questions raised on our webinar “Indemnity and Insurance under JCT D&B - Public Liability and Works Insurance” If you haven’t attended it yet you can book your place here Webinar - Indemnity and insurance under JCT D&B - Public Liability, an | Built Intelligence
What’s it about?
The aim of this webinar is to offer an overview of the requirement of the contractor and employer to provide insurance, as stated in the JCT Design and Build Contract.
You will learn
By the end of this webinar you will be able to:
- Outline the general provisions for the insurance under JCT D&B16
- Identify the differences between damage to property or persons caused by negligence of the contractor and incidents not caused by negligence of the contractor
- Define how the works are insured and process for address if the works are damaged, and
- Out the other insurance provisions in respect of terrorism cover, professional indemnity, Joint Fire Code and other insurances.
How should an Employer deal with a situation where they are requiring works to be carried out on properties that do not belong to them and intend for the Contractor to insure the existing buildings? (For example works being carried out on multiple private residences but paid for by the Employer)
The Insurance would be taken out by the Contractor under Option B and the cost of that added to the Contract Sum. The Contractor would notify its Insurers of the situation in the sense that they would need to know there were multiple occupiers; say tenants, and the tenants would need to make sure the contents of their apartments were insured. It would be prudent for the tenants to notify their insurers of the existence of the works.
If there are two sections of work in the contract. Section 1) Refurbishment of a building and Section 2) complete new build. Should / Can you have two different insurance options within the contract, say Option A and Option C?@mike_tiplady
I’m a Consultant Project Manager. In what instance would I recommend Option B insurance in the contract to a client. It would seem the risk switches to the employer. @mike_Tiplady
How do you define the cap on liability in the contract particulars? would this be based on the cost of the construction works? @Mike_Tiplady
Liz. Pption B does push risk onto the Employer and of course the cost of the insurance is something the Employer will have to bare. The cost to the Contractor is usually less so that is why on new build projects Option A is the preferred solution.
Liz. There are lots of ways in which you can cap liability. Often the Employer and the Contractor will agree something based on the value of the Contract. So you often see on a £20M project a cap at £10. On a higher value Contract at £80M the cap may be around £30m. It depends on a lot of factors such as the level of Professional Indemnity Insurance held by the Main Contractor and the Design Team. There are often exclusions to caps such as claims under PI, deliberate or wilful breach and damages following termination. Its a question of commercial judgment on the part of the Contractor.
Generally Option A is the preferred choice as its cheaper for the Contractor to obtain. You would only go down route B if it was cheaper for the Employer or the Contractor could not obtain the insurance. B is only really used by an Employer that undertakes a lot of building projects; such as a property developer.
in theory you could have 2 different insurances for new build and refurbishment. I have not seen that done and would suggest that it would be more expensive than using Option C. There may also be problems with identifying loss and liability that would complicate matters.