Civil Engineering Reference
In-Depth Information
insurer may be able to avoid the whole policy if there has been fraud or non-disclosure
on the part of one of the co-insureds.
14.1.5 Subrogation
The principle of subrogation is common to all insurance contracts which involve the
insurer indemnifying the insured in respect of a loss or a liability. Subrogation means
that the insurer is entitled to exercise any remedy which may have been exercisable by
the insured in respect of the insured event. In practice, it means that the insurer can
pursue a claim (in the name of the insured) against a third party who may be respon-
sible, either wholly or partly, for the insured loss. Such a right is subject to the insurer
having made payment in respect of the insured's claim and to subrogation rights not
having been excluded by any express contractual term. It was until recently thought
to be a settled rule of law that that subrogation rights are not available against a party
who is a joint insured under a joint names insurance policy, see
Petrofina (UK) Ltd
v.
Magnaload Ltd and Another
(1984). However, the position is perhaps not quite so cer-
tain following the decision in
Tyco Fire & Integrated Solutions Ltd v. Rolls-Royce Motor
Cars Ltd
(2008). Certain 'obiter' remarks made by the Court of Appeal (i.e. made in
passing and non-binding) are to the effect that there is no rule of law that a co-insured
under a joint names policy (or its insurer by way of subrogation) cannot sue another
co-insured in respect of damage covered by the policy and that the position must be
determined on a true construction of the underlying contract. The practical lesson is
that to avoid any doubt the contract should expressly require that the policy exclude
subrogated rights against co-insureds.
14.1.6 Indemnities and insurance
Itisimportanttorecognizethedistinctionbetweenindemnityandinsurance.Abuild-
ing contract will normally contain provisions in terms of which the contractor will
undertake to indemnify the employer against the occurrence of certain events. The
contractwillalsoimposeobligationsoneitherorbothofthepartiesrelativetothe
insuranceofrisks.hereisacross-overbetweentheseindemnityandinsuranceobli-
gations, insofar as insurance may be required to be taken out against the risks covered
by certain indemnities, but the obligations are not necessarily co-extensive. Risks cov-
ered by a particular indemnity may not necessarily be insurable (see Section 14.2.2) or
an indemnified risk may be covered by insurance but the indemnifier may still have a
liability for any insurance deductible or for any claim in excess of the insured amount.
These are matters which it is prudent for the party giving the indemnity to check. Fur-
ther, the parties may agree that a certain risk be covered by insurance and that neither
party should have liability, notwithstanding fault.
Clauses 6.1 and 6.2 of the SBC and the SBC/DB broadly impose an obligation on
the Contractor to indemnify the Employer against two matters: first, against death
and personal injury arising out of or in the course of or caused by the carrying out of
