Insurance Flashcards
What must a surveyor bear in mind when advising on insurances?
Understands the limits of your knowledge and include a specific exclusion with regard to advising on insurance the terms of appointment.
Never advise on insurance without qualifying that advice to the extent that it should be verified by an appropriately qualified and regulated specialist.
Under JCT forms of contract, what are the 3 options as to how the works can be insured?
Option A: New buildings – all risk insurance of the works by the contractor.
Option B: New buildings – all risk insurance of the works by the employer.
Option C: Joint Names Insurance by the employer of existing structures and works in or extensions to them.
What should you consider when checking insurance policies?
Particular attention should be given to ensuring that they meet the contractual obligations as well as to the applicable policy exclusions, conditions and excesses.
Some aspects of cover that insurers may consider as being particularly high-risk may be the subject of limits of indemnity that are ‘in the aggregate’. This may be true, even on policies where the main limits are on an ‘each and every claim’ or an ‘any one occurrence’ basis.
What does Contractors All-Risk Insurance cover?
Covers loss or damage to the works and materials during construction.
CAR insurance is usually taken out in the joint names of the contractor and the employer as is required by the vast majority of standard forms of contract.
Cover generally ceases when the works are handed over to the employer.
What does Professional Indemnity (PI) insurance cover?
Professional Indemnity (PI) insurance provides protection to consultants in respect of claims made against them for negligence or breach of contract for their professional services provided.
The level of cover is set by the RICS and determined by the gross income of the firm.
The contractor may also require PII where undertaking design elements.
What should you check in relations to Professional Indemnity (PI) insurance?
The insurance should be on an ‘each and every claim’ or ‘any one claim’ basis as these provide cover to the full limit of indemnity for each claim that is made against you in a fixed period. The alternative is an ‘in the aggregate’ policy
Check the notification provisions. They are generally a condition precedent of the policy.
Check the policy coverage for specific exclusions such as for external cladding and any other elements of the external envelope.
What does Employers Liability Insurance cover?
It provides an indemnity to an employer for its legal liability to its employees for death and disease or personal injury arising out of their employment.
It is mandatory for all employers employing staff within the UK to effect and maintain EL insurance.
What is the minimum cover that should be required for Employers Liability Insurance?
The limit of indemnity provided must be for a minimum amount of £5,000,000 in respect of any one claim. Higher limits are available and, with quantum payments increasing, consideration should be given to increasing beyond the £10m limit.
What does Public Liability Insurance cover?
Responds to claims by third parties such as members of the public or employees of another company working on site for injury to persons or damage to property caused by the activities of a company.
What is the minimum cover for Public Liability Insurance?
All standard forms of contract will contain requirements relating to the provision of PL insurance and generally there will be provisions requiring that the contractor must effect and maintain cover for a minimum amount of indemnity and that cover must be maintained.
£5m is perhaps the absolute minimum to consider.
What is a joint-names policy and what are it’s advantages?
Joint names insurance is the term used for insurance policies that are effected in the names of two or more parties. Most common among such policies is the contractor’s all-risks insurance.
The big advantage of a joint names policy is that the insurer waives its rights of subrogation against the parties named in the policy. There is, therefore, no post-event litigation between two or more insurance companies and the parties named in the policy can focus on rectifying the damage and completing the project, rather than looking to find a party who was to blame.
What is subrogation and when is it typically used?
Subrogation is the right of the insurer to step into the shoes of the insured in order to pursue a claim against a third party with a contractual obligation to the insured. This allows the insurer to recover the costs of the compensation they have had to pay to the insured party from the party responsible for the loss.
Most common among such policies is the contractor’s all-risks insurance.
What is latent defects insurance?
A latent defects policy provides cover in respect of latent defects that originate from an inherent fault in the buildings construction.
What does ‘in aggregate’ mean?
The sum insured is the total amount that the insurer will pay out over a policy term for multiple claims. Each claim deducts from the total limit available.
What does ‘an one claim’ mean?
Provides cover to the full limit of the indemnity for each and every claim that is made against during the term of the policy.
