Civil Engineering Reference
In-Depth Information
Chapter 14
Insurance
14.1 Insurance: General principles
14.1.1 Introduction
Construction insurance is a specialized and complex subject, a comprehensive explo-
ration of which is beyond the scope of this chapter. This chapter deals only with the
essentialsofthesubject,inthecontextoftheSBC,theSBC/DBandtheNEC3insur-
ance provisions. However, most standard form building contracts contain insurance
provisions which are broadly similar.
In the majority of building contracts the contractor undertakes to indemnify the
employerforlossandliabilitiesarisingfromdeathoforinjurytopersonsandlossofor
damagetoproperty,andthecontractorwillbeobligedtomaintainemployer'sliability
andpublicliabilityinsurancetocovertheriskofsuchlossorliabilityoccurring.
Such types of insurance fall within the category of 'liability' insurance. In other
words, the insurance will cover the liability which the insured party has to a third
party as a result of the insured event.
Most construction contracts will also expressly deal with the other common cat-
egory of insurance, namely, property insurance. In the context of construction con-
tractsthistypeofinsurancewilltypicallycoverthecontractworks,sitematerials,plant
and equipment. The obligation to take out and maintain such insurance may be dealt
with in differing ways. Thus, while in most cases insurance will be in the joint names
of employer and contractor, some contracts may provide that the obligation to take
out such insurance is that of the employer, while others may impose that obligation
on the contractor.
It should also be borne in mind that the characteristics of certain types of contract
may demand more extensive insurance requirements. For example, insurance may
need to be taken out in certain contracts to cover business interruption, fortuitous
pollution, marine claims and/or professional indemnity. At the same time, not all risks
are insurable (or at least not under conventional policies). An obvious example of
this is a construction defect not involving a design error. While this may be insurable
under a specialist latent defects policy (see Section 14.5), it will not be covered by a
standard property insurance policy or a professional indemnity policy.
MacRoberts on Scottish Construction Contracts
,hirdEdition.MacRoberts.
© 2015 John Wiley & Sons, Ltd. Published 2015 by John Wiley & Sons, Ltd.
