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UNDERWRITING CRITERIA GENERAL INFORMATION - 1

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Title: UNDERWRITING CRITERIA GENERAL INFORMATION - 1


1
UNDERWRITING CRITERIAGENERAL INFORMATION - 1
  • NAME OF PROPOSER
  • RELATIONSHIP OF PROPOSER TO PROJECT
  • IS THERE A CONTRACTUAL RESPONSIBILITY TO INCLUDE
    THE INTERESTS OF OTHER PARTIES?
  • IF SO, NAME THESE PARTIES (SEE NEXT SLIDE)
  • LOCATION OF CONTRACT SITE
  • DESCRIBE THE CONTRACT SITE TOPOGRAPHY
  • RESULTS OF ANY GEOTECHNIC AND HYDROLOGY
    INVESTIGATIONS CARRIED OUT NAME(S) OF ENGINEERS
  • DESCRIPTION OF PROJECT
  • COPIES OF PLANS, SPECIFICATIONS AND APPLICABLE
    CONTRACT DOCUMENT CLAUSES WOULD BE OF PARTICULAR
    VALUE TO UNDERWRITER
  • PARTICULARS OF ANY FREE-ISSUE MATERIALS TO BE
    PROVIDED TO THE CONTRACTOR AND VALUE THEREOF

2
CONSTRUCTION HIERACHY
3
UNDERWRITING CRITERIAGENERAL INFORMATION - 2
  • IS THE PROJECT A TURNKEY PROJECT OR WILL IT BE
    TAKEN OVER IN SECTIONS WHEN COMPLETE
  • WILL THE PROJECT BE GIVEN TO ONE CONTRACTOR OR
    WILL IT BE FRAGMENTED IN OTHER WORDS WILL
    SEPARATE CONTRACTS BE AWARDED TO CIVIL,
    STRUCTURAL, ELECTRICAL AND MECHANICAL
    CONTRACTORS
  • WILL SITE PREPARATION INVOLVE BUILDINGS
    DEMOLITION
  • IF SO, PROVIDE PARTICULARS OF WORK ENTAILED, WITH
    PARTICULAR REFERENCE TO BUILDINGS AND POTENTIALLY
    HAZARDOUS SUBSTANCES THAT MAY HAVE BEEN STORED
  • THE OVERALL CONTRACT PERIOD FROMTO
  • A BAR CHART SHOWING VARIOUS ACTIVITIES WOULD BE
    BENEFICIAL TO PREMIUM COMPUTATION
  • THE FULL CONTRACT VALUE INCLUDING FREE-ISSUE
    MATERIALS
  • THE VALUE OF EACH ENGINEERING DISCIPLINE
  • THE SECURITY PRECAUTIONS TO BE UNDERTAKEN TO
    PREVENT THEFT, MALICIOUS DAMAGE ETC.

4
UNDERWRITING CRITERIA CIVIL WORKS 1
  • THE VALUE OF CIVIL WORKS
  • ANY SPECIAL PRECAUTIONS TO BE TAKEN IN VIEW OF
    GEOTECHNIC OR HYDROLOGY FINDINGS
  • DESCRIBE THE FOUNDATIONS ESPECIALLY WHETHER THEY
    INCLUDE PILES AND THEIR TYPE STRIP, RAFT ETC.
  • IS THE POLICY TO PROVIDE FOR PILING, IF SO TYPE
    OF PILES ENVISAGED AND EXPECTED DEPTH OF PILES
  • NAME OF PILING CONTRACTOR
  • PROVIDE THE DEPTH OF EXCAVATIONS
  • TO WHAT EXTENT WILL THERE BE REMOVAL OF SUPPORT
    (LATERAL AND/OR OTHERWISE) TO ADJACENT PROPERTY
    OR BUILDINGS
  • IF TEMPORARY AND PERMANENT SUPPORT TO BE
    INSTALLED WHO WILL UNDERTAKE THIS WORK
  • NAME THE SUPPORT CONTRACTOR
  • WILL THERE BE ANY ON-SITE MANUFACTURE OR CASTING
    OF PRESTRESSED COMPONENTS

5
UNDERWRITING CRITERIA CIVIL WORKS 2
  • PROXIMITY OF SITE TO SEA OR INLAND WATERWAYS
  • IF A RIVER OR DAM PROVIDE THE 50 YEAR FLOOD
    HISTORY, IS THERE A POSSIBILITY OF THE SITE BEING
    FLOODED FROM THIS WATER SOURCE
  • DESCRIBE THE PRECAUTIONS TO PREVENT FLOODING
  • DEPENDING ON HYDROLOGY REPORT, WHAT PRECAUTIONS
    ARE TO BE TAKEN TO HANDLE THE INGRESS OF WATER,
    FROM AN UNDERGROUND SOURCE
  • ALSO, GIVE DETAILS OF STANDBY PUMPING
    ARRANGEMENTS

6
UNDERWRITING CRITERIA CIVIL WORKS 3
  • IF THE CIVIL WORKS COMPRISES SHAFT SINKING
    TUNNELLING OR OTHER UNDERGROUND WORK THEN
    DESCRIBE
  • THE DIAMETER OF THE SHAFT OR TUNNELL,
  • THE PROPOSED DEPTH OF THE SHAFT OR LENGTH OF THE
    TUNNELL AND WHETHER THE SHAFT OR TUNNELL WILL BE
    LINED,
  • THE PRE-EXCAVATION GROUND INTEGRITY
    INVESTIGATIONS, A COPY OF THE REPORT WOULD BE
    NECESSARY PLUS THE ENGINEERS RECOMMENDATIONS,
  • PARTICULARS OF THE METHOD OF PROBING AHEAD OF THE
    WORKING FACE DURING EXCAVATION IS A MUST
  • FOR ANY RAISEBORING OR TUNNELL BORING WORK THE
    DIAMETER OF THE RAISEBORE HEAD OR TUNNELL BORING
    HEAD MUST BE GIVEN PLUS DETAILS AS REQUIRED IN
    THE SECOND THIRD AND FOURTH PARAMETER ABOVE.

7
PROBING AHEAD OF THE WORKING FACE
  • THIS TYPE OF RADIAL DRILLING AHEAD OF THE WORKING
    FACE IS TO IDENTIFY THE NATURE OF THE GROUND
    CONDITIONS AND THE PRESENCE OF WATER
  • TO BE EXPECTED AS THE TUNNEL OR SHAFT CONTINUES
  • SIDE ELEVATION END ELEVATION
  • DRILLING OUTWARDS 30 TO 45 DEGREES FROM THE
    STRAIGHT LINE

8
UNDERWRITING CRITERIA STRUCTURAL WORKS
  • THE STRUCTURE TO BE DESCRIBED FULLY GIVING
  • THE TYPE OF THE STRUCTURE IE. FACTORY, WAREHOUSE,
    OFFICE BLOCK, HOSPITAL OR TENEMENT BUILDING ETC.,
  • THE NATURE OF THE STRUCTURE WHETHER IT IS OF
    CONCRETE, WITH BRICK INFILLS OR A BASIC STEEL
    STRUCTURE WITH CONCRETE LANDINGS WITH BRICK
    INFILL ETC.,
  • THE NUMBER OF BASEMENTS,
  • DETAILS OF ANY PROTOTYPE OR UNTRIED FEATURES
    EMBODIED IN THE DESIGN OF THE STRUCTURE, WHETHER
    STRUCTURAL OR CONSTRUCTION METHOD. IS THE
    SELECTED CONTRACTOR FAMILIAR WITH THIS METHODOGY,
  • THE NUMBER OF FLOORS,
  • THE TYPE OF FINISHES,
  • DETAILS WHEN ELECTRICALS AND MECHANICALS WILL BE
    INSTALLED
  • DESCRIBE THE MEASURES TO PREVENT THE STRUCTURE
    FROM FLOODING AND WHAT PUMPING ARRANGEMENTS WILL
    BE PRESENT TO HANDLE THE INGRESS OF WATER.

9
UNDERWRITING CRITERIA ELECTRICAL MECHANICAL
WORKS
  • DESCRIBE THE ELECTRICALS AND MECHANICALS TO BE
    INCORPORATED INTO THE WORKS IE BOILERS, POWER
    SUPPLY TRANSFORMERS AND SWITCHGEAR, AIR
    CONDITIONING AND/OR MANUFACTURING MACHINERY EG TO
    MANUFACTURE WIDGETS
  • WHETHER THERE ARE ANY UNTRIED FEATURES OR
    PROTOTYPES OR WHETHER THE MACHINERY IS STANDARD
    OF THE SAME TYPE AND SIZE CURRENTLY OPERATING IN
    MANY FACTORIES
  • GIVE PARTICULARS OF THE INSTALLATION PROCESS AND
    TESTING METHODS
  • WILL PARTS OF THE MACHINERY BE TAKEN INTO
    OPERATION BEFORE THE PLANT AS A WHOLE IS
    COMMISSIONED, IN OTHER WORDS WILL THERE BE
    BENEFICIAL USE BEFORE TAKE-OVER, IF SO, MUST
    INSURANCE CONTINUE AFTER BEING TAKEN INTO USE? IS
    COVER TO INCLUDE ELECTRICAL AND MECHANICAL
    BREAKDOWN?
  • IS THE FEEDSTOCK INFLAMABLE OR IS THERE AN
    EXPLOSION HAZARD
  • DESCRIBE THE TESTING PROCEDURE PARTICULARLY THE
    RUNNING TEST AND SAFETY PRECAUTIONS DURING TESTING

10
WHAT DETERMINES A PROTOTYPEOR UNTRIED FEATURE
  • The cylinder on the left is the standard cylinder
    that has been manufactured for many years and has
    stood the test of time. All that has been done
    to manufacture the cylinder on the right is to
    increase size, otherwise, everything else is the
    same, thus it is a prototype with untried
    features. Accordingly, the stresses and strains
    will be multiples of the original.
  • In other words a failure waiting
  • to happen.

11
UNDERWRITING CRITERIAMAINTENANCE PERIOD
  • GIVE DETAILS OF THE MAINTENANCE REQUIREMENTS OF
    THE CONTRACT, DOES THE CONTRACT CALL FOR
  • MAINTENANCE VISITS ONLY,
  • LIMITED MAINTENANCE PROVIDING FOR DAMAGE
    CONSEQUENT ON PRIOR DEFECTS OF MATERIALS,
    WORKMANSHIP, DESIGN PLAN OR SPECIFICATION
    OCCURRING DURING CONSTRUCTION AT THE CONTRACT
    SITE,
  • WIDER FORM OF MAINTENANCE ALLOWING FOR DAMAGE
    RESULTING FROM ALL PRIOR DEFECTS OF MATERIALS,
    WORKMANSHIP, DESIGN PLAN OR SPECIFICATION
  • DOES THE CONTRACT ALLOW FOR SUBROGATION RIGHTS IN
    THE EVENT OF DEFECTIVE MATERIALS, DESIGN, PLAN OR
    SPECIFICATION OR OFF-SITE WORKMANSHIP.

12
GENERAL CONSIDERATIONSTHIRD PARTY LIABILITY - 1
  • LIMIT OF INDEMNITY (INCLUSIVE OR EXCLUSIVE OF
    EXTENSIONS R00,000,000
  • PROPERTY DAMAGE EXCESS
  • RISK LOCATION RELATIVE TO
  • ADJACENT PROPERTIES
  • EXISTING PUBLIC SERVICES OF WATER, SEWERAGE,
    ELECTRICITY OVERHEAD LINES OR UNDERGROUND CABLES
  • EXISTING PROPERTY ADJACENT TO CONTRACT WORKS SITE
  • IS THERE TO BE ANY BLASTING, IF SO, GIVE DETAILS
  • DEPTH OF EXCAVATION
  • WILL THE EXCAVATION AFFECT THE SUPPORT OF
    ADJACENT THIRD PARTY BUILDINGS
  • EXPERTISE OF DESIGN ENGINEER AND CONTRACTOR
  • ARE THE WORKING METHODS STANDARD AND WILL THERE
    BE ANY METHODS OF WORK UNFAMILIAR TO THE
    CONTRACTOR

13
GENERAL CONSIDERATIONSPUBLIC LIABILITY - 2
  • ONE MUST THEN CONSIDER THE NECESSITY TO INCLUDE
    ANY OR ALL OF THE FOLLOWING EXTENSIONS OF COVER
  • ARREST, ASSAULT, DISCHARGE AND DEFAMATION
  • EMERGENCY MEDICAL EXPENSES
  • PREVENTION OF ACCESS
  • LEGAL DEFENCE COSTS
  • TRESSPASS OR NUISANCE
  • REMOVAL OF SUPPORT (LATERAL OR VERTICAL) COULD BE
    AN EXTENSION, HOWEVER THE TERMS OF THIS COVER
    DIFFERS CONSIDERABLY FROM THE BASIC COVER, THUS
    IT IS DESIREABLE TO ISSUE A SEPARATE SECTION OR
    POLICY. THIS COVER WILL BE DISCUSSED SEPERATELY.

14
PREMIUM COMPUTATION CONTRACT WORKS GENERAL - 1
  • UNDERWRITING IS A SCIENCE AND NOT MERELY A RULE
    OF THUMB
  • THE UNDERWRITER WHO RELIES ON GUESSWORK MAY BE
    LUCKY FOR A PERIOD BUT WILL SOON COME SHORT
  • ONE CANNOT ASSUME THAT A SINGLE RATE WOULD APPLY
    TO ALL AND ANY PROJECT, NO MATTER HOW SLIGHT,
    THERE ARE ALWAYS DIFFERENCES WHICH COULD MAKE A
    VAST DIFFERENCE TO THE RATE CHARGED
  • ACCORDINGLY EACH RISK MUST BE UNDERWRITTEN ON ITS
    OWN MERITS AND PECULIARITIES WITH EACH ASPECT
    BEING GIVEN INDIVIDUAL CONSIDERATION
  • WE THEN CALCULATE INDIVIDUAL RATES FOR THE CIVIL,
    STRUCTURAL,ELECTRICAL MECHANICAL AND LIABILITY
    RISKS
  • NO, I AM NOT GOING TO GIVE YOU BASIS RATES, BUT I
    WILL SUGGEST METHODS OF CALCULATION. THE BASIS
    RATES ARE FOR EACH UNDERWRITING HOUSE TO
    DETERMINE THEMSELVES.

15
PREMIUM COMPUTATION CONTRACT WORKS GENERAL - 2
  • IT MUST BE APPRECIATED THAT PERILS OF THE
    ENVIRONMENT HAVE A DIFFERENT IMPACT ON EACH OF
    THE
  • CONSTRUCTION DISCIPLINES
  • FOR EXAMPLE, EXCESSIVE RAINFALL MAY NOT BE AS
    CRITICAL TO A PARTLY CONSTRUCTED STRUCTURE AS IT
    WOULD TO FOUNDATION EXCAVATIONS, ON THE OTHER
    HAND WIND MAY NOT CAUSE MUCH DAMAGE TO AN
    EXCAVATION AS IT WOULD TO A STRUCTURE NOT
    ENTIRELY BRACED OR STEEL BEING LIFTED INTO
    POSITION A FURTHER PROBLEM WOULD BE WHEN A
    STRUCTURE IS NOT FULLY CLAD THUS CAUSING A WIND
    TUNNELL WITHOUT ANY EXIT
  • FIRE IS A HAZARD MORE SERIOUS WHERE THE BUILDING
    IS NEARING COMPLETION OR WHERE MACHINERY HAS BEEN
    INSTALLED OFTEN PACKING MATERIALS ARE NOT REMOVED
    FROM SITE. FIRE IS NOT THAT SERIOUS WHEN RELATED
    TO EXCAVATIONS OR FOUNDATIONS ONE COULD EXPECT
    MINIMAL DAMAGE

16
PREMIUM COMPUTATION CONTRACT WORKS CIVIL WORKS
1
  • It is usual for there to be a specific rate for
    each project type e.g.. ROADS, RAILWAY SYSTEMS,
    DAMS, SHAFT SINKING, AIRPORT RUNWAYS/APRONS,
    TUNNELLING AND THE LIKE
  • THE APPLICABLE RATE X (SAY 2.5) MUST THEN BE
    APPORTIONED TO RISK CATEGORIES, FOR EXAMPLE,
    (THESE ARE JUST AN ILLUSTRATION AND ARE NOT
    REALISTIC) STORM/WIND 45 FIRE/LIGHTNING/EXPLOSION
    5 COLLAPSE/LANDSLIDE 40 THEFT/MALICIOUS DAMAGE
    10
  • NEXT ONE MUST DECIDE ON THE EXTENT OF THE RISK
    APPLICABLE TO EACH CATEGORY, THUS STORM AND WIND
    ARE 45 OF 2.5 1.125 BUT THE WORK IS BEING
    UNDERTAKEN DURING THE DRY SEASON THEREFORE THIS
    RISK IS REGARDED AS MINIMAL SAY 25 OF THE NORM,
    OUR RATE FOR THIS PORTION IS THUS 25 1.125
    0.281
  • THE SAME CALCULATION IS CARRIED OUT FOR EACH OF
    THE OTHER CATEGORIES OF THE RATE X

17
PREMIUM COMPUTATION CONTRACT WORKS CIVIL WORKS
2
  • THE NEXT PART OF THE CALCULATION IS TO TAKE INTO
    ACCOUNT THE PERIOD ON RISK, THIS MAY NOT ONLY BE
    THE CONSTRUCTION PERIOD, BUT THE RISK MAY
    CONTINUE UNTIL TAKE-OVER OF THE COMPLETED PROJECT
    AS IN THE CASE OF A TURNKEY PROJECT
  • IT MUST BE REMEMBERED THAT IF TAKE-OVER IS TO BE
    DELAYED UNTIL FINAL COMPLETION, THEN THE CIVIL
    RISK WILL BE EXPOSED FOR A PERIOD THAT MUST BE
    DETERMINED (DURING CONSTRUCTION AND THEREAFTER
    UNTIL TAKEOVER)
  • FINALLY THERE MUST BE A CHARGE FOR THE
    MAINTENANCE PERIOD DEPENDING ON THE NATURE OF
    MAINTENANCE COVER REQUIRED IN TERMS OF THE
    CONTRACT
  • THE CUMULATIVE RATE IS THEN APPLIED TO THE CIVIL
    PORTION OF THE CONTRACT VALUE TO PRODUCE A
    PREMIUM.

18
PREMIUM COMPUTATION CONTRACT WORKS STRUCTURAL
WORKS 1
  • There is a specific rate for each project type
    e.g.. RESIDENTIAL BUILDINGS, OFFICE BLOCKS,
    HOTELS, HOSPITALS, SHOPPING MALLS, BRIDGES,
    FACTORY PREMISES, WATER TOWERS CHIMNEYS AND THE
    LIKE
  • THE APPLICABLE RATE X (SAY 1) MUST THEN BE
    APPORTIONED TO RISK CATEGORIES, FOR EXAMPLE,
    (THESE ARE JUST AN ILLUSTRATION AND ARE NOT
    REALISTIC) STORM/WIND 20 FIRE/LIGHTNING/EXPLOSION
    30 COLLAPSE/LANDSLIDE 35 THEFT/MALICIOUS
    DAMAGE 15
  • NEXT ONE MUST ONE MUST DECIDE ON THE EXTENT OF
    THE RISK APPLICABLE TO EACH CATEGORY, THUS FIRE
    ETC. ARE 30 OF X(X BEING SAY 1) (30X) 0.3
    BUT THE WORK IS BEING UNDERTAKEN OUT OF THE
    LIGHTNING SEASON AND ALL PACKING MATERIALS ARE
    REMOVED FROM THE BUILDING THEREFORE THIS RISK IS
    REGARDED AS MINIMAL SAY 20 OF THE NORM, OUR RATE
    FOR THIS PORTION IS THUS 20 OF 0.3 0.06
  • THE SAME CALCULATION IS CARRIED OUT FOR EACH OF
    THE OTHER CATEGORIES OF THE RATE X

19
PREMIUM COMPUTATION CONTRACT WORKS STRUCTURAL
WORKS 2
  • THE NEXT PART OF THE CALCULATION IS TO TAKE INTO
    ACCOUNT THE PERIOD ON RISK, THIS MAY NOT ONLY BE
    THE CONSTRUCTION PERIOD, BUT THE RISK MAY
    CONTINUE UNTIL TAKE-OVER OF THE COMPLETED PROJECT
    AS IN THE CASE OF A TURNKEY PROJECT
  • IT MUST BE REMEMBERED THAT IF TAKE-OVER IS TO BE
    DELAYED UNTIL FINAL COMPLETION, THEN THE
    STRUCTURAL RISK WILL BE AT RISK FOR AN EXTENDED
    PERIOD WHICH MUST BE DETERMINED ESPECIALLY IF
    MACHINERY IS TO BE INSTALLED BEFORE TAKE-OVER OF
    THE COMPLETED STRUCTURE THUS AN ADDITIONAL CHARGE
    FOR THE EXTENDED PERIOD AFTER CONSTRUCTION IS
    WARRANTED
  • FINALLY THERE MUST BE A CHARGE FOR THE
    MAINTENANCE PERIOD DEPENDING ON THE NATURE OF
    MAINTENANCE COVER REQUIRED IN TERMS OF THE
    CONTRACT
  • THE CUMULATIVE RATE IS THEN APPLIED TO THE
    STRUCTURAL PORTION OF THE CONTRACT VALUE TO
    PRODUCE A PREMIUM.

20
PREMIUM COMPUTATION CONTRACT WORKS ELECTRICAL
MECHANICAL WORKS - 1
  • UNLIKE CIVIL AND STRUCTURAL RATING, THE
    ELECTRICAL AND MECHANICAL RATE IS BUILT UP OVER A
    NUMBER OF FACTORS, THESE ARE
  • HANDLING AND STATIC TESTING
  • TESTING AND RUNNING
  • FIRE AND SPECIAL PERILS DURING CONSTRUCTION
  • FIRE AND SPECIAL PERILS DURING TESTING
  • ENVIRONMENT
  • BENEFICIAL USE IF REQUIRED IN TERMS OF CONTRACT
  • MAINTENANCE ONCE AGAIN BASED ON THE REQUIRED
    COVER
  • EACH OF THESE RATE COMPONENTS HAS ITS OWN
    SPECIFIC RATE WHICH EXCEPT FOR THE HANDLING AND
    STATIC TESTING RATE ARE ADJUSTED TO TAKE IN TO
    ACCOUNT THE PARTICULAR PERIOD OF COVER AND RISK
    FACTOR. EACH OF THESE RATE COMPONENTS ARE
    EXPLAINED AS FOLLOWS

21
PREMIUM COMPUTATION CONTRACT WORKS ELECTRICAL
MECHANICAL WORKS - 2
  • HANDLING AND STATIC TESTING THIS RATE COMPONENT
    ALLOWS FOR PRE ERECTION STORAGE ON SITE, MOVEMENT
    FROM STORAGE TO POINT OF ERECTION, HOISTING ONTO
    FOUNDATIONS, ASSEMBLY THEN NON ENERGISED TESTING
  • TESTING AND RUNNING IT IS AT THIS STAGE THAT
    POWER IS FIRST APPLIED TO THE MACHINE AND
    FEEDSTOCK INTRODUCED. EFFECTIVELY THIS COVER
    EQUATES TO MACHINERY BREAKDOWN COVER. THE PERIOD
    IS USUALLY RESTRICTED TO 30 DAYS ON WHICH THE
    MACHINERY IS OPERATED FOR TESTING PURPOSES. IT IS
    ASSUMED THAT ALL MANUFACTURERS SAFETY
    REQUIREMENTS AND COMMISSIONING PROCEDURES WILL BE
    ADHERED TO AND THAT SAFETY DEVICES WILL NOT BE
    OVERRIDDEN OR NULLIFIED. IT IS USUAL THAT WHERE
    THERE ARE ANY UNTRIED FEATURES OR PROTOTYPES THAT
    TESTING COVER WILL BE EXCLUDED
  • TESTING COVER IS USUALLY ONLY GIVEN ON NEW
    MACHINERY

22
PREMIUM COMPUTATION CONTRACT WORKS ELECTRICAL
MECHANICAL WORKS - 3
  • FIRE AND SPECIAL PERILS THESE RISKS ARE NO
    DIFFERENT TO THOSE GIVEN UNDER A FIRE OR ASSETS
    POLICY, ACCORDINGLY, THE RATE SHOULD BE SIMILAR
    TO THE STANDARD FIRE POLICY. THIS COMPONENT IS
    DIVIDED INTO TWO CATEGORIES, NAMELY DURING
    CONSTRUCTION AND THEN DURING TESTING AND RUNNING.
    A LESSER RATE SHOULD BE APPLIED TO THE
    CONSTRUCTION PERIOD POSSIBLY 50 OF FIRE PERILS
    RATE, WHEREAS THE FULL RATE SHOULD BE APPLIED TO
    THE TESTING PERIOD. IN BOTH INSTANCES THE RATE
    SHOULD BE ADJUSTED FOR THE PERIOD OF COVER
  • ENVIRONMENT THIS COMPONENT TAKES INTO
    CONSIDERATION THE RISKS OF THEFT, MALICIOUS
    DAMAGE GEOTECHNIC AND HYDROLOGY RISKS AND A
    VARIETY OF OTHER MINOR PERILS.

23
UNDERWRITING CRITERIAPUBLIC LIABILITY - 1
  • THIS SECTION OF THE POLICY PROVIDES FOR LIABILITY
    TO THIRD PARTIES IN RESPECT OF LOSS OF OR DAMAGE
    TO PROPERTY OR PERSONAL INJURIES OR DEATH OF
    PERSONS NOT BEING EMPLOYEES OR THE FAMILY OF THE
    INSURED PARTY
  • WE ARE NOT TALKING ABOUT A SEPARATE POLICY, BUT
    AS A SECTION TO A CONSTRUCTION POLICY, THUS ANY
    LIABILITY INCURRED SHOULD ORIGINATE AT THE
    CONTRACT SITE IN CONNECTION WITH SITE ACTIVITIES
    DURING THE PERIOD OF INSURANCE
  • TO PROVIDE FOR ANY WIDER COVER A GENERAL
    LIABILITY POLICY SHOULD BE TAKEN OUT IN THE
    ACCIDENT DEPARTMENT
  • THERE ARE TWO BASES OF COMPUTING PUBLIC LIABILITY
    PREMIUMS EITHER ON
  • LIMIT OF LIABILITY,
  • OR CONTRACT VALUE
  • NEITHER BASIS CAN BE CONSIDERED SUPERIOR TO THE
    OTHER, EFFECTIVELY THE PREMIUM SHOULD BE THE
    SAME

24
UNDERWRITING CRITERIAPUBLIC LIABILITY - 2
  • RECOGNISING THAT THERE ARE TWO ACCEPTABLE BASES,
    WHAT FACTORS SHOULD BE TAKEN INTO CONSIDERATION
    IN COMPUTING THE PREMIUM
  • ALL THOSE LISTED HEREUNDER WILL EITHER BE
    PROMINENT IN THE PREMIUM CALCULATION OR OF LITTLE
    OR NO EFFECT, EACH MUST BE CONSIDERED ON MERITS
  • IS THE SITE A GREEN FIELDS OR BROWN FIELDS SITE,
    IS THERE A POSSIBILITY OF DAMAGE TO EXISTING
    PROPERTY EITHER ON-SITE OR ON SITES ADJACENT TO
    THE CONTRACT SITE,
  • IS THE RISK LOCATION IN/OUT OF TOWN ARE THERE
    ANY PUBLIC SERVICES IN THE VICINITY,
  • ARE ANY EXPLOSIVES TO BE USED,
  • DEPTH OF EXCAVATION/ GEOTECHNIC RISKS,
  • EXPERTISE AND TRACK RECORD OF CONTRACTOR AND
    DESIGN ENGINEER,
  • WORKING METHODS AND DESIGN, PLAN OR
    SPECIFICATION,
  • RISK MANAGEMENT
  • THE POTENTIAL RISK OF SPREAD OF FIRE TO ADJACENT
    PROPERTIES EITHER ON SITE OR IN THE PROXIMITY
    THERETO

25
UNDERWRITING CRITERIATHIRD PARTY LIABILITY - 3
  • EXTENSIONS OF COVER
  • ARE THE SELECTED EXTENSIONS OF COVER TO BE WITHIN
    THE OVERALL LIMIT OF INDEMNITY OR ARE THEY TO
    HAVE SEPARATE LIMITS OF INDEMNITY? IF SO, PLEASE
    PROVIDE THE REQUIRED LIMITS
  • EXTENSION OF COVER LIMIT OF INDEMNITY
  • ARREST,ASSAULT, DISCHARGE
  • OR DEFAMATION R00,000,000
  • EMERGENCY MEDICAL EXPENSES R 000,000
  • PREVENTION OF ACCESS R 0,000,000
  • LEGAL DEFENCE COSTS R 0,000,000
  • TRESSPASS OR NUISANCE R00,000,000

26
PREMIUM COMPUTATION PUBLIC (THIRD PARTY)
LIABILITY - 1
  • THE CALCULATION BEGINS WITH A BASIC RATE WHICH
    IS A FUNCTION OF THE LIMIT OF INDEMNITY WHICH
    ENVISAGES A 12 MONTH CONTRACT PERIOD, THE BASIC
    RATE DIFFERS ACCORDING TO WHETHER IT IS TO BE
    APPLIED TO THE CONTRACT VALUE OR THE LIMIT OF
    INDEMNITY
  • THE FIRST ADJUSTMENT TAKES INTO CONSIDERATION THE
    PERIOD OF THE CONTRACT BY ADJUSTMENT UPWARDS OR
    DOWNWARDS FOR LONGER OR SHORTER PERIODS FROM
    TAKE-OVER OF SITE UNTIL FINAL HANDOVER OF THE
    PROJECT
  • THE NEXT ADJUSTMENTS TAKE INTO CONSIDERATION
    THOSE PREVIOUSLY MENTIONED WHICH ARE AS FOLLOWS

27
PREMIUM COMPUTATIONPUBLIC (THIRD PARTY)
LIABILITY - 2
  • IS THE SITE GREEN FIELDS OR BROWN FIELDS IS THERE
    A POSSIBILITY OF DAMAGE TO EXISTING PROPERTY
    EITHER ON-SITE OR ON SITES ADJACENT TO THE
    CONTRACT SITE
  • IS THE RISK LOCATION IN/OUT OF TOWN ARE THERE
    ANY PUBLIC SERVICES IN THE VICINITY
  • ARE ANY EXPLOSIVES TO BE USED
  • DEPTH OF EXCAVATION/ GEOTECHNIC RISKS
  • EXPERTISE AND TRACK RECORD OF CONTRACTOR AND
    DESIGN ENGINEER
  • WORKING METHODS AND DESIGN, PLAN SPECIFICATION
  • RISK MANAGEMENT
  • FINALLY THE EXTENSIONS MUST BE ADDRESSED

28
PREMIUM COMPUTATIONPUBLIC (THIRD PARTY)
LIABILITY - 3
  • ARREST, ASSAULT, DISCHARGE AND DEFAMATION,
  • EMERGENCY MEDICAL EXPENSES,
  • PREVENTION OF ACCESS,
  • LEGAL DEFENCE COSTS,
  • TRESSPASS OR NUISANCE.
  • THE COMPUTATION OF THE REMOVAL OF SUPPORT RISK IS
    UNDERTAKEN ON MUCH THE SAME BASIS, BUT THE BASIC
    RATE IS MUCH HIGHER THAN FOR STANDARD
    LIABILITIES
  • WE HAVE NOT MENTIONED THE RISKS APPLICABLE TO
    IMPLOSION OF BUILDINGS BEFORE NOW, HOWEVER, THESE
    ARE MUCH MORE ONEROUS THAN ORDINARY LIABILITIES
    OR REMOVAL OF SUPPORT LIABILITIES, BUT WE DO NOT
    BELIEVE THESE RISKS TO BE APPROPRIATE TO THIS
    DISCUSSION.

29
PREPARING A QUOTATION
  • IT IS IMPORTANT FOR THE UNDERWRITER TO BE AWARE
    OF HOW THE QUOTATION IS PRESENTED, YOU LIVE BY
    YOUR WRITTEN WORD, OR LACK THEREOF
  • CLEARLY, IF THE INTERMEDIARY HAS ASKED FOR A
    CERTAIN EXTENSION AND THIS ASPECT HAS NEITHER
    NEGATIVELY NOR POSITIVELY BEEN ADDRESSED, IT CAN
    BE ARGUED THAT THE REQUEST HAS BEEN ACCEPTED
  • THE FOLLOWING SUGGESTED QUOTATION WORDING MAY
    ASSIST IN EXPRESSING CLEARLY THE INTENTION
  • AS AN INTERMEDIARY YOU TOO SHOULD DEFINE CLEARLY
    THE NATURE AND EXTENT OF COVER YOU ARE
    REQUESTING, THE ONUS IS THEN ON THE UNDERWRITER
    TO ACCEPT OR REJECT YOUR REQUEST BY WRITTEN
    COMMENT IN THE QUOTQTION PRESENTED.

30
SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC
LIABILITY - 1
  • XYZ INSURANCE COMPANY LIMITED (THE INSURER)
  • 25 SUMMER PLACE, GLORIOUS COVE
  • INSURERS CONTACT PERSON JOHN DOE
  • TELEPHONE NUMBER 011 398 0000
  • E-MAIL ADDRESS DOEJ_at_XYZINS.CO.ZA
  • DATE OF QUOTATION 1ST JULY, 2010
  • CLIENT ABC MANUFACTURING LIMITED
  • INTERMEDIARY SMITH AND JONES BROKERS - R SMITH
  • INSURED PROJECT NEW ELECTRIC MOTOR MANUFACTURING
    FACILITY FOR ABC MANUFACTURING
  • PROJECT VALUE R25,500,000
  • CIVIL WORKS R5,000,000
  • STRUCTURAL WORKS R7,500,000
  • ELECTRICAL/MECHANICAL WORKS R10,240,000
  • PRELIMINARY GENERAL R2,760,000

31
SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC
LIABILITY - 2
  • POLICY WORDING
  • XYZ INSURANCE COMPANY LIMITED CONTRACT WORKS
    WORDING OR ANY OTHER WORDING AS MAY BE AGREED BY
    THE COMPANY (XYZ INS CO LTD) (THE INTERMEDIARY
    MAY HAVE SUBMITTED A POLICY WORDING AS PART OF
    HIS QUOTATION REQUEST, YOU MUST COMMENT THEREON
    AS TO ITS ACCEPTABILITY OR OTHERWISE AND REFER TO
    AN ACCEPTABLE WORDING)
  • THE INSURED PARTIES
  • THE PRINCIPAL
  • ABC MANUFACTURING LIMITED
  • THE SITE CONTRACTOR
  • MLM CONTRACTORS (PTY) LIMITED
  • SUB-CONTRACTORS
  • EMPLOYED ON THE CONTRACT SITE (EMPLOYED BY THE
    CONTRACTOR(S) OR NOMINATED BY THE PRINCIPAL) BUT
    ONLY TO THE EXTENT OF LOSS, DAMAGE OR LIABILITY
    ORIGINATING AT THE CONTRACT SITE ARISING OUT OF
    THEIR SITE INVOLVEMENT EXCLUDING ANY PROFESSIONAL
    ACTIVITY OR OFF-SITE MANUFACTURING OR
    MANUFACTURING GUARANTEES

32
SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC
LIABILITY - 3
  • THE INSURED PARTIES (CONTINUED)
  • ANY OTHER NAMED PARTY PROPOSED TO AND ACCEPTED BY
    THE INSURER SUCH AS PROJECT MANAGERS,
    MANUFACTURERS, SUPPLIERS OR PROFESSIONALS BUT
    ONLY TO THE EXTENT OF LOSS, DAMAGE OR LIABILITY
    ORIGINATING AT THE CONTRACT SITE, EXCLUDING ANY
    PROFESSIONAL ACTIVITY OFF-SITE MANUFACTURING
    PROCESS OR MANUFACTURERS GUARANTEES
  • BASIS OF INDEMNIFICATION
  • CONTRACT WORKS LIMIT OF INDEMNITY
  • THE INSURED PROPERTY R25,500,000
  • EXPEDITING COSTS
  • 50 OF AGREED CLAIM EXCEEDING R100,000 OR
  • WHERE LOSS DOES NOT EXCEED R100,000 50,000
  • ESCALATION
  • DURING CONTRACT PERIOD 15
  • DURING PERIOD OF DAMAGE REINSTATEMENT 15

33
SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC
LIABILITY - 4
  • CURRENCY FLUCTUATION 20
  • DEMOLITION AND DEBRIS REMOVAL
  • ASSOCIATED WITH DAMAGE TO WORKS R00,000,000
  • WITHOUT DAMAGE TO THE WORKS R00,000,000
  • PROFESSIONAL FEES R 0,000,000
  • FIRE BRIGADE CHARGES R 0,000,000
  • PUBLIC AUTHORITIES CHARGES R 0,000,000
  • PUBLIC AUTHORITIES REINSTATEMENT R 0,000,000
  • OFF-SITE STORAGE NOT AT MNFRS. R 0,000,000
  • WORK AWAY R 0,000,000
  • REMOVAL TO A PLACE OF SAFETY R 0,000,000
  • RECORDS AND PLANS R 0,000,000
  • CLAIMS PREPARATION COSTS R 0,000,000

34
SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC
LIABILITY - 5
  • THIRD PARTY LIABILITY
  • LIMIT OF INDEMNITY R00,000,000
  • INCLUDED IN LIMIT OF INDEMNITY
  • LEGAL DEFENCE COSTS R 0,000,000
  • EMERGENCY MEDICAL EXPENSES R 000,000
  • TRESSPASS OR NUISANCE R 0,000,000
  • ARREST ASSAULT DISCHARGE
  • DEFAMATION R 000,000
  • WHERE A ZERO HAS BEEN PLACED OPPOSITE AN ITEM
    THIS MEANS THAT NO COVER IS TO BE GIVEN FOR THAT
    ITEM.
  • NOTE TO UNDERWRITER
  • THE LIMITS FOR THE EXTENSIONS SHOWN ABOVE ARE
    NOT NECESSARILY SUB LIMITS INCLUDED IN THE
    OVERALL LIMIT OF INDEMNITY. IF UNDERWRITTEN AS
    ADDITIONAL LIMITS THE WORDS INCLUDED IN LIMIT OF
    INDEMNITY SHOULD BE OMITTED AND THE WORDS
    ADDITIONAL TO LIMIT OF INDEMNITY ADDED

35
SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC
LIABILITY - 6
  • THE PROPERTY INSURED
  • THE PERMANENT WORKS BEING ALL WORKS AND PROPERTY
    AS DESCRIBED IN THE CONTRACT DOCUMENTS AS THE
    CONTRACT WORKS AND ANY TEMPORARY WORKS CREATED OR
    INSTALLED IN ORDER TO CONSTRUCT THE PERMANENT
    WORKS
  • PERIOD OF COVER
  • COVER COMMENCES WITH THE HANDING OVER OF THE
    CONTRACT SITE TO THE CONTRACTOR, OR THE DELIVERY
    OF MATERIALS AND OTHER THINGS FOR INCORPORATION
    INTO THE PROJECT DURING ANY PERIOD OF STORAGE ON
    OR ABOUT THE CONTRACT SITE AWAITING
    INCORPORATION, CONSTRUCTION OR ERECTION
  • DURING ANY PERIOD OF OFF-SITE STORAGE AT ANY SITE
    AGREED BY THE INSURER WHICH SHALL NOT INCLUDE
    SUPPLIERS OR MANUFACTURERS PREMISES,
  • WHILST BEING CONSTRUCTED, ERECTED OR INSTALLED,

36
SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC
LIABILITY - 7
  • PERIOD OF COVER PERIOD OF COVER (CONTINUED)
  • DURING ANY PERIOD OF CONTRACTUAL BENEFICIAL
    OCCUPATION OF ANY COMPLETED OR PARTIALLY
    COMPLETED WORKS DECLARED TO AND ACCEPTED (IN
    WRITING) BY THE INSURER NOT EXCEEDING MONTHS
  • DURING ANY CONTRACTUAL MAINTENANCE PERIOD
    COVERING DAMAGE
  • OCCURRING DURING CONTRACTUAL VISITS BY THE
    CONTRACTOR OR MANUFACTURER FOR THE PURPOSE OF
    CALIBRATION ADJUSTMENT OR MAKING GOOD DEFECTS OR
    DAMAGE DUE TO CONSTRUCTION OR ERECTION OR MAKING
    GOOD ANY DAMAGE DONE DURING SUCH CONTRACTUAL
    VISITS
  • DAMAGE DUE TO PRIOR DEFECTS OR DEFECTIVE
    CONDITIONS BUT EXCLUDING THE DEFECTIVE
    CONDITION ITSELF, WHICH SHOULD FORM THE SUBJECT
    OF A MANUFACTURERS GUARANTEE OR PROFESSIONAL
    INDEMNITY

37
SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC
LIABILITY - 8
  • THE DEDUCTIBLES
  • IN RESPECT OF EACH AND EVERY CLAIM ARISING OUT OF
    OR IN CONNECTION WITH ANY ONE EVENT OR OCCURRENCE
    OR SERIES OF OCCURRENCES ARISING OUT OF OR IN
    CONNECTION WITH ANY ONE EVENT, THE INSURED SHALL
    BEAR THE FIRST
  • PERIL EXCESS
  • COLLAPSE R0,000
  • STORM, WIND, TEMPEST, FLOOD, SNOW, R0,000
  • HAIL, SLEET, FROST
  • SUBSIDENCE, LANDSLIP R0,000
  • DEFECTIVE DESIGN, PLAN, R0,000
  • SPECIFICATION
  • FIRE, LIGHTNING, EXPLOSION R0,000
  • THEFT, MALICIOUS DAMAGE R0,000

38
SUGGESTED QUOTATION WORDING WORKS PLUS PUBLIC
LIABILITY - 9
  • RATE AND PREMIUM BASED ON CONTRACT VALUE
  • CONTRACT WORKS 0,00 R000,000
  • THIRD PARTY LIABILITY 0,00 R 00,000
  • TERMS AND CONDITIONS OF QUOTATION
  • 1. THIS QUOTATION HOLDS GOOD FOR 90 DAYS FROM THE
    DATE SHOWN AS THE DATE OF QUOTATION
  • 2. THE QUOTATION IS BASED ON THE UNDERWRITING
    INFORMATION SUPPLIED BY THE INTERMEDIARY WHICH
    SHALL FORM THE BASIS HEROF EXCEPT AS EXCLUDED
    HEREIN SHOULD THERE BE ANY CHANGES IN THE
    INFORMATION SUPPLIED THE COMPANY RESERVES THE
    RIGHT TO AMEND THIS QUOTATION ACCORDINGLY
  • 3. THE DEFECTS EXCEPTION ENVISAGED HEREBY IS THE
    COSTS ADDITIONAL DE5 ,LEG2 ETC.

39
CONTRACTORS LIABILITIES
  • A CONTRACTOR CAN INCUR LIABILITIES FROM MANY
    SOURCES THUS HE NEEDS A PACKAGE OF LIABILITY
    COVERS OVER AND ABOVE THAT GIVEN UNDER A CONTRACT
    WORKS OR CONSTRUCTION POLICY. IT CAN EVEN BE
    SAID THAT A COMPREHENSIVE LIABILITY PACKAGE
    SHOULD INCLUDE HIS POTENTIAL CONSTRUCTION RISKS
    LIABILITIES. ACCORDINGLY, THE CONSTRUCTION
    POLICY SHOULD EXCLUDE THE CONTRACTORS
    LIABILITIES, HOWEVER, WHERE OTHER PARTIES ARE
    INVOLVED ON THE CONSTRUCTION SITE THEY MAY NEED
    TO BE COVERED FOR CONSTRUCTION LIABILITIES.
  • THE QUESTION THEN ARISES, SHOULD THE CONSTRUCTION
    POLICY WAIVE SUBROGATION RIGHTS AGAINST THE
    CONTRACTOR?

40
CONTRACTORS LIABILITY POLICY -1
  • LET US EXAMINE THE RECOMMENDED COMPONENTS TO A
    COMPREHENSIVE CONTRACTORS LIABILITY POLICY
  • IT IS UNUSUAL FOR THIS TYPE OF POLICY TO BE
    UNDERWRITTEN IN THE CONSTRUCTION OR ENGINEERING
    DEPARTMENT IT IS MORE AN ACCIDENT DEPARTMENT
    RISK,
  • FIRSTLY, WE MUST UNDERSTAND THAT THESE COVERS CAN
    EITHER BE BASED ON CLAIMS MADE OR CLAIMS
    INCURRED
  • THE FORMER BASIS RECOGNISES THAT ANY CLAIM LODGED
    AGAINST THE INSURED DURIUNG A PARTICULAR PERIOD
    OF INSURANCE, IRRESPECTIVE OF WHEN THE TRIGGERING
    EVENT OCCURRED, SHALL BE REGARDED AS VALID AS
    LONG AS IT FALLS WITHIN THE AMBIT OF THE POLICY,
  • ON THE OTHER HAND ON A CLAIMS INCURRED BASIS ANY
    CLAIM LODGED AGAINST THE INSURED MUST THEN REVERT
    TO THE POLICY IN FORCE AT THE TIME THAT THE
    TRIGGERING EVENT OCCURRED

41
CONTRACTORS LIABILITY POLICY -2
  • THE FOLLOWING ARE THE MORE COMMON SECTIONS TO A
    COMPREHENSIVE Contractors Liability Policy
  • PUBLIC LIABILITY -GENERAL AND CONTRACTING
    LIABILITIES
  • PRODUCTS LIABILITY PRODUCTS MANUFACTURED OR
    SUPPLIED
  • EMPLOYERS LIABILITY INJURY OR SICKNESS ARISING
    OUT OF EMPLOYMENT,
  • PROFESSIONAL INDEMNITY BREACH OF PROFESSIONAL
    ACTIVITY OR DUTY,
  • MOTOR EXCESS OF LOSS LIABILITY DUE TO LOSS OR
    ACCIDENT DURING THE PERIOD OF THE POLICY,
  • PRODUCTS GUARANTEE LIABILITY FOR PRODUCTS
    SUPPLIED, SOLD ,INSTALLED ETC.,
  • PRODUCT RECALL WHERE SUCH PRODUCT MAY CAUSE
    INJURY OR DAMAGE,
  • CARRIERS LIABILITY DAMAGE ARISING OUT OF THE
    CARRIAGE OF GOODS INCLUDING CONSEQUENTIAL LOSS,

42
CONTRACTORS LIABILITY POLICY -3
  • LIABILITY SECTIONS CONTINUED
  • PLANT HIRE LIABILITY LEGAL LIABILITY FOR LOSS OR
    DAMAGE IN TERMS OF A HIRE AGREEMENT INCLUDING
    CONSEQUENTIAL LOSS,
  • PURE ECONOMIC LOSS CLAIMS MADE DURING THE PERIOD
    OF INSURANCE OTHER THAN FOR PROFESSIONAL SERVICES
    FOR COMPENSATION IN TORT, DELICT OR STATUTE
  • THE EXTENSIONS OF COVER ARE SIMILAR TO THOSE
    UNDER THE MORE SPECIFIC CONSTRUCTION POLICY
    LIABILITY SECTION
  • WHERE A MORE SPECIFIC POLICY INCLUDING
    LIABILITIES HAS BEEN TAKEN OUT THE CONTRACTORS
    LIABILITY POLICY WILL ONLY PROVIDE LIABILITY FOR
    DIFFERENCES IN COVER OR LIMIT OF INDEMNITY, IT
    WILL NOT BE BROUGHT IN
  • TO CONTRIBUTION WITH THE MORE SPECIFIC POLICY

43
CONSTRUCTION PLANT INSURANCE - 1
  • WHAT COMPRISES PLANT UNDER A CONSTRUCTION POLICY?
  • MOBILE PLANT AND EQUIPMENT
  • MOBILE CRANES, CRAWLER CRANES, DUMP TRUCKS,
    BULLDOZERS, ROAD SCRAPERS, BACKACTORS,
    EXCAVATORS, ROAD TANKERS (WATER, FUEL OR
    BITUMEN), ROAD ROLLERS
  • NON MOBILE PLANT AND EQUIPMENT
  • CONCRETE BATCH PLANT, CONCRETE MIXERS AIR
    COMPRESSORS, ELECTRICITY GENERATING PLANT, MINI
    SUB-STATIONS, CONVEYOR SYSTEMS, TOWER CRANES,
    WELDING GENERATORS AND TRANSFORMERS
  • MINING PLANT AND EQUIPMENT
  • DRAGLINES, EXCAVATORS, JUMBO DRILL RIGS, MINING
    SCOOPS, DUMP TRUCKS AND MINE WINDERS LONG WALL
    COAL CUTTERS, MINING SCOOPS AND TUNNELL BORING
    MACHINES

44
CONSTRUCTION PLANT INSURANCE - 2
  • CLASSES OF OWNERSHIP
  • CONTRACTORS WHO OWN PLANT FOR CONTRACTING WORK
  • PLANT OWNED FOR OWN USE SUCH AS MINING
    OPERATIONS, INDUSTRIAL WORKS AND SERVICE
    INDUSTRIES
  • PLANT HIRE COMPANIES FOR HIRE TO CUSTOMERS
  • VIRTUALLY EVERY PROJECT REQUIRES PLANT OF ONE
    TYPE OR ANOTHER, LET US CONSIDER THE VARIOUS
    CATEGORIES OF PLANT
  • CONSTRUCTION CONTRACTORS
  • BUILDING CONTRACTORS CONCRETE BATCH PLANT,
    CRANES MOBILE, CRAWLER AND TOWER, CONCRETE
    MIXERS, CONCRETE ESCALATORS, PUMPS CONCRETE AND
    WATER, EXCAVATORS, BACKACTORS AND THE LIKE
  • ROAD CONSTRUCTION CONTRACTORS THESE CONTRACTORS
    USE A LARGE VARIETY OF PLANT SUCH AS, SCRAPERS,
    EXCAVATORS, ROLLERS, BULLDOZERS, BACKACTORS,
    MOBILE CRANES,AIR COMPRESSOR SETS, PAVING
    MACHINES ETC.

45
CONSTRUCTION PLANT INSURANCE - 3
  • MINING OPERATIONS (MAINLY OPENCAST)
  • EXCAVATORS, DRAGLINES, JUMBO DRILLS, EARTH MOVING
    TRUCKS, MINING SCOOPS, CONVEYOR SYSTEMS,
    CRUSHERS, CRANES, COMPRESSORS, DIESEL GENERATING
    PLANT ETC.
  • IN SOME INSTANCES THE PLANT MAY INCLUDE MINE
    WINDERS
  • OR TUNNELL BORING MACHINES
  • PLANT HIRE COMPANIES
  • THEIR PURPOSE IS AS A SERVICE TO CONSTRUCTION,
    MINING AND INDUSTRY, TO PROVIDE PLANT AND
    MACHINERY AS REQUIRED FOR A VARIETY OF JOBS.
    SOMETIMES THESE HIRE COMPANIES ARE A DIVISION
    WITHIN A CONSTRUCTION, MINING OR INDUSTRIAL
    COMPANY, THE PURPOSE OF WHICH IS TO SEPARATE THE
    COSTLY AND ONEROUS OWNERSHIP OF PLANT AND
    MACHINERY FROM THEIR CORE BUSINESS, WHETHER THIS
    BE CONSTRUCTION, MINING OR OTHER INDUSTRIAL
    ACTIVITY

46
CONSTRUCTION PLANT INSURANCE 4THE NEED FOR
INSURANCE
  • THIS TYPE OF PLANT EQUIPMENT IS GENERALLY HIGH
    RISK, SUSCEPTIBLE TO IMPACT, FIRE, THEFT AND
    ELEMENTAL PERILS. WE ARE NOT SUGGESTING THAT THE
    USERS DO SO NEGLIGENTLY, CARELESSLY OR WITHOUT
    REGARD FOR POSSIBLE DANGER OR DAMAGE. PLANT IS
    USUALLY OPERATED BY A DEDICATED OPERATOR OR
    OPERATORS, THUS THE ONUS FOR ANY UNDUE OPERATION
    OF THE PLANT RESULTING IN DAMAGE COULD BE PEGGED
    AT THE DOOR OF AN INDIVIDUAL. IT MUST BE
    APPRECIATED THAT THIS TYPE OF PLANT HAS LARGE
    QUANTITIES OF FUEL OIL AND HYDRAULIC OIL BOTH OF
    WHICH ARE HIGHLY INFLAMABLE
  • DEPENDING ON THE TERRAIN IN WHICH IT WORKS
    TOPPLING OVER OR OVERTURNING IS A VERY REAL RISK
  • IN VIEW OF THE ELEMENT OF RISK WHICH IS HIGH
    VARIED IT WOULD BE UNWISE NOT TO INSURE THE PLANT.

47
CONSTRUCTION PLANT INSURANCE 5THE INSURANCE
POLICY COVER
  • THE COVER IS SIMILAR FOR ALL CLASSES OF OWNERSHIP
  • AS THIS EQUIPMENT IS ESSENTIALLY FOR OUTDOOR USE,
    IT QUALIFIES FOR WHAT CAN BE TERMED ALL RISKS
    COVER. THIS DOES NOT MEAN THAT THERE ARE NO
    TERMS AND CONDITIONS APPLICABLE TO THE INSURANCE,
    INDEED THERE ARE LIMITING FACTORS TO THE COVER.
    THE COVER EMBRACES
  • ELECTRICAL AND MECHANICAL BREAKDOWN (OPTIONAL
    COVER)
  • FIRE LIGHTNING EXPLOSION
  • ELEMENTAL PERILS
  • FLOOD
  • THEFT MALICIOUS DAMAGE
  • IMPACT COLLISION OVERTURNING
  • UNINTENTIONAL OVERLOADING

48
CONSTRUCTION PLANT INSURANCE 6THE INSURANCE
POLICY EXCEPTIONS
  • ALTHOUGH WE REFER TO THE COVER AS BEING ALL
    RISKS, NEVERTHELESS THERE ARE SOME EXCEPTIONS
    THESE ARE AS FOLLOWS
  • WEAR AND TEAR AND GRADUAL DETERIORATION
  • PENALTIES FOR DELAY AND GUARANTEES OF
    PERFORMANCE
  • LOSS OF USE
  • TYRES AND TUBES
  • EXPENDABLE PARTS AND TOOLS
  • THEFT NOT IDENTIFIABLE WITH A SPECIFIC INCIDENT
  • TANDEM OR MULTIPLE LIFTS
  • EXISTING DEFECTS, WILFUL ACTS OR NEGLIGENT ACTS
  • EXPERIMENTS OR INTENTIONAL OVERLOADING
  • WHILST BEING OPERATED BY A PERSON
  • UNDER THE INFLUENCE OF INTOXICATING LIQUOR OR
    DRUGS,
  • AUTHORISED BY THE OWNER OR HIS RESPONSIBLE PERSON
    WHO IS NOT QUALIFIED TO OPERATE THE PLANT
  • ELECTRICAL OR MECHANICAL BREAKDOWN (IF OPTION NOT
    REQUIRED)

49
CONSTRUCTION PLANT INSURANCE 7HIRED-IN PLANT
POLICY AMENDMENT
  • THE POLICY WORDING IS GENERALLY SIMILAR WHETHER
    COVERING OWNED PLANT OR HIRED-IN PLANT, TO
    ACHIEVE THE ADJUSTMENT TO THE STANDARD POLICY THE
    FOLLOWING MEMORANDA ARE INCLUDED
  • A) THE INSUREDS LEGAL LIABILITY UNDER ANY HIRING
    AGREEMENT TO PAY COMPENSATION FOR PHYSICAL LOSS
    OF OR DAMAGE TO ANY INSURED HIRED-IN MACHINERY
    WHILST UNDER HIS CUSTODY OR CONTROL AT THE
    INSUREDS PREMISES DESCRIBED IN THE SCHEDULE
    HERETO
  • B) THE INSUREDS LEGAL LIABILITY UNDER ANY HIRING
    AGREEMENT TO PAY CONTINUING HIRE CHARGES IN
    CONSEQUENCE OF PHYSICAL LOSS OF OR DAMAGE TO THE
    INSURED HIRED-IN MACHINERY DESCRIBED IN THE
    SCHEDULE HERETO FOLLOWING INDEMNIFIABLE LOSS OR
    DAMAGE PROVIDED FOR IN A) ABOVE
  • AS PREVIOUSLY STATED THE POLICY REQUIRES THAT ANY
    HIRING AGREEMENT SHALL BE NO MORE ONEROUS THAN
    THE CPHA CONDITIONS.

50
CONSTRUCTION PLANT INSURANCE 6HIRED IN/OUT
PLANT MACHINERY
  • THIS PLANT AND EQUIPMENT IS HIRED IN/OUT UNDER
    SPECIFIC HIRING CONDITIONS. INSURERS PREFER THE
    CONDITIONS AS PUBLISHED BY THE PLANT HIRE
    ASSOCIATION KNOWN AS THE CPHA CONDITIONS. THE
    CPHA CONDITIONS ARE CONSIDERED TO BE THE MOST
    FAIR FROM BOTH THE OWNERS AND THE HIRERS POINTS
    OF VIEW. IN FACT, A POLICY COVERING HIRED PLANT
    OFTEN INCLUDES A MEMORANDUN WHICH STATES
  • THIS INSURANCE IS BASED ON HIRING AGREEMENTS NO
    MORE ONEROUS THAN THOSE PUBLISHED BY THE
    CONTRACTORS PLANT HIRE ASSOCIATION, SHOULD PLANT
    HAVE BEEN HIRED UNDER OTHER HIRING AGREEMENTS
    THEN ANY LOSS OR DAMAGE COVERED UNDER THIS POLICY
    WILL BE ADJUSTED AS IF THE CPHA CONDITIONS HAD
    BEEN IN FORCE

51
CONSTRUCTION PLANT INSURANCE 7RISK ASSESSMENT
  • THE INFORMATION REQUIRED EMBRACES THE FOLLOWING
  • IS THE PLANT OWNED OR HIRED IN
  • IF HIRED IN, THE APPLICABLE CONDITIONS OF HIRE
  • THE TYPE OF HIRED IN PLANT AND THE HIRE CHARGE
    FOR THE PERIOD OF HIRE
  • WHETHER ANY HIRED IN ITEM HAS A REPLACEMENT VALUE
    EXCEEDING R------ (NOT ALL INSURERS REQUIRE THIS)
  • FOR OWNED PLANT A FULL SCHEDULE OF PLANT TO BE
    INSURED AND THE NEW REPLACEMENT VALUE OF EACH
    ITEM
  • DETAILS OF TOWER CRANES AND OTHER CRANES OWNED OR
    HIRED IN TOGETHER WITH COPIES OF THEIR LAST
    INSPECTION REPORT
  • WHETHER THERE ARE TO BE ANY TANDEM OR MULTIPLE
    LIFTS, DETAILS THEREOF,INSURERS RESERVE RIGHT OF
    EVALUATION
  • AGE OF ROPES AND SLINGS AND LATEST INSPECTION
    REPORT
  • WHETHER LIFTING APPARATUS FITTED WITH LOAD
    GUAGES
  • CERTIFICATE OF COMPETENCY OF CRANE OPERATORS
  • EXPERIENCE OF RIGGERS WHO WILL CONTROL LIFTING
  • DETAILS OF LOSSES OVER LAST THREE YEARS.

52
CONSTRUCTION PLANT INSURANCE 8CPHA HIRE
CONDITIONS
  • THE FOLLOWING IS A RESUME OF THE CPHA HIRE
    AGREEMENTS
  • THE HIRER MAY NOT CEDE ASSIGN NOR SUBLET THE
    AGREEMENT IN ANY WAY
  • THE OWNER HAS AT ANY TIME THE RIGHT OF ACCESS TO
    SITE TO EXAMINE THE HIRED-IN PROPERTY
  • THE HIRER MUST ENSURE THAT OR AT HIS OWN COST
    CREATE A SUITABLE WORKING TABLE FOR THE SAFE
    OPERATION OF ANY HIRED IN CRANE, FAILING WHICH
    THE AGREEMENT SHALL BE NULL AND VOID
  • THE HIRER IS OBLIGED TO NOTIFY THE OWNER OF ANY
    DEFECTS IN THE PLANT AT THE TIME OF DELIVERY OR
    ANY DEFECTS THAT MAY DEVELOP DURING THE HIRE
    PERIOD, THE PLANT SHALL CEASE TO BE USED, ANY
    DAMAGE THAT MAY OCCUR DUE TO CONTINUED USE SHALL
    BE FOR THE COST OF THE HIRER
  • THE PLANT IS TO BE USED ONLY WITHIN ITS RATED
    CAPACITY, IN THE CASE OF CRANES NO TANDEM LIFTS,
    UNLESS AGREED TO

53
CONSTRUCTION PLANT INSURANCE 9CPHA HIRE
CONDITIONS
  • THE OWNERS OPERATOR BECOMES THE SERVANT OF THE
    HIRER WHO HAS THE ABSOLUTE CONTROL OF HIS
    ACTIONS
  • RISK OF LOSS OR DAMAGE PASSES TO THE HIRER ONLY
    ON DELIVERY TO SITE UNLESS THE HIRER HAS ARRANGED
    TRANSIT OF THE PROPERTY TO SITE FROM THE OWNERS
    PREMISES IN WHICH CASE THE HIRER IS RESPONSIBLE
  • THE HIRER INDEMNIFIES THE OWNER FOR ALL LIABILITY
    ARISING OUT OF THE USE OF THE PLANT BY THE HIRER
  • THE HIRER SHALL BE RESPONSIBLE FOR ON-GOING HIRE
    CHARGES DUE TO INCLEMENT WEATHER OR NORMAL
    MAINTENANCE OR REPAIRING PUNCTURES AND THE LIKE
  • THE HIRER SHALL NOT BE LIABLE FOR ON-GOING HIRE
    CHARGES DUE TO UNAVAILABILITY OF ANY OWNERS
    OPERATOR OR DUE TO BREAKDOWN FROM INHERENT
    DEFECT
  • THE HIRER ACCEPTS LIABILITY FOR DIRECT CONS LOSS

54
CONSTRUCTION PLANT INSURANCE 10CPHA HIRE
CONDITIONS
  • THE HIRER IS RESPONSIBLE FOR THE INSURANCE DURING
    THE HIRE PERIOD
  • ANY BREACH OF CONDITIONS OF THE AGREEMENT OR ACT
    OF INSOLVENCY OR BEING PLACED UNDER JUDICIAL
    MANAGEMENT THE OWNER MAY REPOSSES THE PLANT ON
    HIRE AND WILL BE ENTITLED TO THE HIRE FEES DUE
    FOR THE FULL AND UNEXPIRED HIRE PERIOD
  • IN THE CASE OF CRANES AND MOBILE PLANT HIRE FEES
    WILL BE BASED ON TIME SHEETS PREPARED BY THE
    PLANT OPERATOR AND SIGNED BY THE HIRER
  • THERE IS NO OBLIGATION ON THE OWNER TO SUPPLY
    SLINGS, IF THESE ARE SUPPLIED NO RESPONSIBILITY
    IS ACCEPTED BY THE OWNER WHO HAS NO CONTROL OVER
    USE
  • TYRES AND TUBES ARE THE RESPONSIBILITY OF HIRER
  • PLANT MAY BE RECALLED FOR REPAIR BY THE OWNER.

55
EMPLOYERS LIABILITY - 1
  • EMPLOYERS LIABILITY
  • TO WHOM DO THE EMPLOYERS HAVE A POTENTIAL
    RESPONSIBILITY TO PAY COMPENSATION FOR INJURIES
    OR DISEASE DUE TO THEIR OCCUPATION,UNDER WHAT
    LAW
  • PRIOR TO 1994 ALL EMPLOYEES EARNING LESS THAN A
    SPECIFIED AMOUNT, SPECIFIED IN TERMS OF THE
    WORKMANS COMPENSATION ACT (WCA), WERE CLASSED AS
    WORKMEN. THEY OR THEIR DEPENDANTS COULD CLAIM
    COMPENSATION UNDER THE ACT, BUT HAD NO LEGAL
    RIGHT TO SUE THEIR EMPLOYERS
  • THOSE WORKMEN EARNING IN EXCESS OF THE PRESCRIBED
    AMOUNT WERE IN TERMS OF THE ACT CLASSED AS
    NON-WORKMEN
  • NON WORKMEN WERE PRECLUDED FROM CLAIMING
    COMPENSATION FOR OCCUPATIONAL INJURIES OR
    DISEASE, UNDER THE WORKMANS COMPENSATION ACT,
    BUT WERE ABLE TO CLAIM COMPENSATION FROM THEIR
    EMPLOYERS FOR SUCH INJURIES OR DISEASE,
    ACCORDINGLY, MOST EMPLOYERS TOOK OUT EMPLOYERS
    LIABILITY INSURANCE

56
EMPLOYERS LIABILITY - 2
  • IN 1994 THE COMPENSATION FOR OCCUPATIONAL
    INJURIES AND DISEASES ACT (130 OF 1993) WAS
    PROMULGATED, COMMONLY KNOWN AS THE COID ACT
  • IN TERMS OF THE ACT ALL EMPLOYEES (THE BENEFITS
    ARE PEGGED TO BE A DEFINED INCOME LEVEL) AND
    PRECLUDES EMPLOYEES FROM CLAIMING COMPENSATION
    FROM THEIR EMPLOYERS FOR INJURIES OR DISEASE
    ARISING OUT OF THEIR OCCUPATION, ONLY IN
    EXCEPTIONAL CASES WHERE EMPLOYMENT IS NOT
    CLASSIFIED AS EMPLOYEES ARE THEY FREE TO SUE
    THEIR EMPLOYER FOR COMPENSATION UNDER COMMON LAW
    FOR SUCH INJURIES OR DISEASES
  • THE COID ACT DEFINITION OF EMPLOYEE INCLUDES
    APPRENTICES AND LEARNERS, BUT NOT THOSE
    CONTRACTED TO CARRY OUT WORK FOR THE EMPLOYER OR
    THEIR SUB-CONTRACTORS
  • CONSEQUENTLY EMPLOYERS LIABILITY CLAIMS ARE RARE

57
EMPLOYERS LIABILITY - 3
  • UNDER A MODERN EMPLOYERS LIABILITY POLICY, DEATH
    AND BODILY INJURY INCLUDES DISEASE OR ILLNESS.
    THIS COVER IS UNLIKE PUBLIC LIABILITY POLICIES IN
    THAT PROPERTY DAMAGE IS NOT INCLUDED
  • IT IS IMPORTANT TO UNDERSTAND THAT UNDER THE
    USUAL EMPLOYERS LIABILITY, INJURY OR ILLNESS MUST
    OCCUR DURING THE PERIOD OF INSURANCE. THE CLAIM
    MAY BE MADE AND THE INSURERS LIABILITY ARISE
    MANY YEARS AFTER THE CAUSE OF THE ACTION, EVEN
    AFTER THE ORIGINAL INSURER IS OFF RISK. THIS
    EQUATES TO A CLAIMS INCURRED WORDING. THE
    INSURER WHO WAS ON RISK AT THE TIME THE CAUSE
    OCCURRED IS THE INSURER RESPONSIBLE FOR THE CLAIM.

58
EMPLOYERS LIABILITY - 4
  • IT IS RECOMMENDED THAT THIS CHAPTER (8) OF THE
    IISA CONSTRUCTION INSURANCE STUDY BOOK BE
    CAREFULLY READ
  • THE COID ACT PROVIDES FOR COMPENSATION FOR
    DISABLEMENT CAUSED BY OCCUPATIONAL INJURIES OR
    DISEASES SUSTAINED OR CONTRACTED BY EMPLOYEES IN
    THE COURSE OF THEIR EMPLOYMENT, OR DEATH FROM
    SUCH INJURIES OR DISEASE.
  • DISABLEMENT INCLUDES CONVENTIONAL BODILY INJURY
    UNDER A CONVENTIONAL EMPLOYERS LIABILITY POLICY
  • DISABLEMENT AS DEFINED BY COID MEANS TEMPORARY
    PARTIAL DISABLEMENT TEMPORARY TOTAL DISABLEMENT,
    PERMANENT DISABLEMENT OR SERIOUS DISFIGUREMENT
  • COID AFFORDS A MORE COMPREHENSIVE COVER THAN A
    NORMAL EMPLOYERS LIABILITY POLICY. UNDER AN
    EMPLOYERS LIABILITY POLICY, THE EMPLOYER HAS TO
    BE NEGLIGENT BEFORE A VALID CLAIM CAN ARISE.
    COID DOES NOT REQUIRE NEGLIGENCE ON THE PART OF
    THE EMPLOYER. IT IS SUFFICIENT FOR THE
    DISABLEMENT TO BE AS A RESULT OF AN ACCIDENT NOT
    NECESSARILY DUE TO NEGLIGENCE. THUS COID HAS A
    WIDER APPLICATION.

59
PROJECT 3TO BE PRESENTED AT NEXT SESSION
  • An Employee, let us call him Joe, while working
    on a machine in the production shop and, not
    wearing a safety belt slips and falls to the
    ground some 4 metres below and breaks his leg, it
    is a compound fracture. He is incapacitated for
    six weeks while the bone heals, he cannot attend
    work, but returns to work at the beginning of the
    seventh week, although, the sore on his leg has
    not completely healed. Some three weeks later,
    when the sore still has not healed he visits his
    Doctor again and the Doctor identifies that
    gangrene has set in and is at an advanced stage,
    unfortunately, the only remedy is to amputate his
    leg.
  • How will he be compensated under the Coid Act,
    would he have been treated any different under a
    Employers Liability Policy? What would the Coid
    Act Commissioner say about the lack of Safety
    belt?

60
PROFESSIONAL INDEMNITY INSURANCE1
  • THIS IS A CLASS OF LIABILITY INSURANCE
  • THE LAW RELATING TO DEFECTS IN BUILDINGS AND
    STRUCTURES AS WELL AS THAT RELATING TO ECONOMIC
    LOSS HAS BECOME ONEROUS TO CONTRACTORS,
    ENGINEERS, ARCHITECHTS, SURVEYORS AND OTHER
    PROFESSIONALS
  • AS A CONSEQUENCE PROFESSIONAL INDEMNITY INSURANCE
    HAS BECOME OF GREAT SIGNIFICANCE TO PROFESSIONAL
    BODIES
  • THE COVER IS ON A CLAIMS MADE BASIS IN OTHER
    WORDS IF A CLAIM IS FIRST MADE AGAINST AN INSURED
    SOME TIME AFTER THE OCCURRENCE OF THE EVENT THAT
    GAVE RISE TO THE CLAIM, THEN THE INSURER WHO IS
    CURRENTLY ON RISK SHALL BECOME LIABLE TO
    INDEMNIFY THE INSURED FOR THE CLAIM

61
PROFESSIONAL INDEMNITY INSURANCE2
  • THE PRIMARY FUNCTION OF THE POLICY IS TO PROVIDE
    FOR FINANCIAL OR ECONOMIC LOSS IN OTHER WORDS
    LOSSES NOT ACCOMPANIED BY PHYSICAL DAMAGE OR
    BODILY INJURY
  • IT IS IMPORTANT TO FULLY DESCRIBE ALL THE
    ACTIVITIES OF THE INSURED IN THE RECITAL CLAUSE
    AS THE INDEMNITY APPLIES TO THE STATED BUSINESS
    AND NO OTHER FOR EXAMPLE DESIGN AND CONSTRUCT
    CONTRACTORS, ARCHITECHTS, DESIGN ENGINEERS ETC.
  • IT IS A LEGAL LIABILITY POLICY, THUS THE
    INSURERS OBLIGATION TO INDEMNIFY ONLY BECOMES
    PAYABLE ONCE THE INSURED HAS BEEN FOUND TO BE
    LEGALLY LIABLE
  • PROFESSIONAL INDEMNITY IS NOT A CONTRACT BASED ON
    MORAL OR COMMERCIAL CONSIDERATIONS

62
PROFESSIONAL INDEMNITY INSURANCE3
  • COVER IS BASED ON BREACH OF PROFESSIONAL DUTY
  • THE CLAIM HAS TO BE MADE (AS PREVIOUSLY
    DISCUSSED) DURING THE PERIOD OF INSURANCE
  • COVER ENVISAGES CLAIMS ARISING OUT OF NEGLIGENT
    ACTS, ERRORS OR OMISSIONS THESE WORDS HAVE NEVER
    BEEN DEFINED, SOME LEGAL CASES TAKE THE VIEW THAT
    THEY REFER TO NEGLIGENCE ONLY, THERE ARE, OF
    COURSE, OTHER INTERPRETATIONS
  • IN THE CASE WIMPY CONSTRUCTION UK LTD. VS
    POOLE(1984) IT WAS HELD THAT THE TERM OMISSION
    ERROR OR NEGLIGENT ACT COVERED AN OMISSION OR
    ERROR WITHOUT NEGLIGENCE, EVEN THOUGH AN
    ANCILLARY CLAUSE IN THE POLICY REFERRED TO
    NEGLIGENT ACT, ERROR OR OMISSION

63
PROFESSIONAL INDEMNITY INSURANCE4
  • THE DESIGN AND CONSTRUCT POLICY WORDING EXCLUDES
    ANY LIABILITY ARISING DUE TO THE INSURED
    (CONTRACTOR) HAVING GIVEN AN EXPRESS WARRANTY OR
    GUARANTEE THAT INCREASES THE INSUREDS LIABILITY.
    THIS EXCLUSION DOES NOT APPLY TO LIABILITY WHICH
    WOULD HAVE ATTACHED IN THE ABSENCE OF SUCH
    EXPRESS WARRANTY OR GUARANTEE
  • THE P.I. POLICY REFERS NOT ONLY TO THE INSURED
    NAMED IN THE SCHEDULE , BUT ALSO TO PREDECESSORS
    IN BUSINESS OR ANY EMPLOYEE OF THE INSURED
  • WHEN BUSINESSES AMALGAMATE OR SPLIT UP, THE
    APPLICATION OF THE PREDECESSORS TO BUSINESS
    CLAUSE CAN GIVE RISE TO DIFFICULTIES
  • WHERE THERE HAS BEEN A RECENT AMALGAMATION OR
    SPLIT IT IS IMPORTANT TO ASCERTAIN EXACTLY WHAT
    THE LIABILITIES OF THE NEW AND OLD BUSINESSES
    ARE.

64
PROFESSIONAL INDEMNITY INSURANCE5
  • NEGLIGENCE BY EMPLOYEES OF THE INSURED OR
    EMPLOYEES OF PREDECESSORS IN BUSINESS IS ALSO
    COVERED. MISTAKES BY EMPLOYEES ARE THE MOST
    FREQUENT CAUSE OF CLAIMS UNDER A P.I. POLICY
  • THE P.I. POLICY ALSO PROTECTS THE INSURED AGAINST
    ANY LIABILITY HE MAY INCUR ARISING OUT OF THE USE
    OR EMPLOYMENT OF AGENTS
  • THIS SUBJECT IS MAINLY A PUBLIC LIABILITY COVER
    AND WILL BE COVERED MORE EXTENSIVELY BY THE
    PUBLIC LIABILITY COURSE, WE THEREFORE, DO NOT
    INTEND TO GO FURTHER INTO THIS SUBJECT.

65
BUILDING DEFECTS INSURANCE1
  • OTHERWISE KNOWN OVERSEAS AS DECENNIAL LIABILITY
  • IT HAS ITS ORIGINS IN NAPOLEONIC LAW
  • IT ONCE AGAIN GAINED POPULARITY AFTER THE FIRST
    WORLD WAR WHEN CONSIDERABLE CONSTRUCTION WAS
    TAKING PLACE IN EUROPE
  • THE POLICY COVERS INHERENT DEFECTS IN BUILDING
    STRUCTURES WHICH ONLY BECOME MANIFEST AFTER THE
    COMPLETION OF CONSTRUCTION, WHERE THIS THREATENS
    THE STABILITY OF THE STRUCTURE DUE TO DESIGN PLAN
    SPECIFICATION MATERIALS OR WORKMANSHIP LANDSLIP
    SUBSIDENCE OR HEAVE IS ALSO COVERED
  • THE COVER IS BASED ON THE DESIGN PLAN AND
    SPECIFICATION BEING FULLY DIVULGED TO INSURERS
    FOR APPROVAL BY THEIR CONSULTANTS AND THAT
    GEOTECHNIC AND HYDROLOGY TESTS ARE CARRIED OUT ON
    THE SITE AND THE RESULTS ARE GIVEN TO INSURERS
    FOR APPROVAL
  • COVER MUST BE APPLIED FOR BEFORE COMMENCEMENT

66
BUILDING DEFECTS INSURANCE2
  • THE PRIMARY COVER EXCLUDES WATERPROOFING OF THE
    BUILDING ENVELOPE, HOWEVER, THIS DOES NOT EXCLUDE
    DAMAGE TO THE STRUCTURE AS A CONSEQUENCE OF
    FAULTY WEATHER PROOFING
  • INSURERS CONSULTANTS MUST BE GIVEN ACCESS TO
    SITE THROUGHOUT THE CONSTRUCTION PERIOD
  • AFTER PRACTICAL COMPLETION A FURTHER INSPECTION
    OF THE ASPECTS THAT REQUIRED RECTIFICATION OR
    ATTENTION, ONCE SATISFACTORY COMPLETION HAS
    OCCURRED, BUILDING DEFECTS COVER CAN BE
    CONFIRMED
  • COVER GENERALLY EXCLUDES FIRE AND ALLIED PERILS,
    DAMAGE DUE TO ALTERATIONS, MODIFICATIONS OR
    EXTENSIONS INADEQUATE MAINTENANCE OR WHERE THE
    DESIGN LOAD HAS BEEN EXCEEDED
  • THIS COVER DOES NOT TAKE PRECEDENCE TO THE
    MAINTENANCE COVER AFFORDED BY THE CONSTRUCTION
    POLICY.

67
CONSEQUENTIAL LOSS DUE TO CONSTRUCTION ACCIDENTS
  • THERE ARE A VARIETY OF CONSEQUENTIAL LOSS COVERS
    THAT MAY BE TRIGGERED BY CONSTRUCTION RISKS, BOTH
    THE EMPLOYER AND THE CONTRACTOR CAN BE EXPOSED TO
    LOSSES AS A RESULT OF CONSTRUCTION ACCIDENTS
  • THE COVERS ENVISAGED ARE
  • INCREASED COST OF WORKING CONTRACTORS,
  • ADVANCE LOSS OF RENT EMPLOYERS AND DEVELOPERS,
  • ADVANCE LOSS OF INTEREST EMPLOYERS AND
    DEVELOPERS,
  • ADVANCE PROFITS/DELAYED START UP.- EMPLOYERS
  • WE WILL EXAMINE EACH OF THESE INDIVIDUALLY

68
INCREASED COST OF WORKING
  • ACCIDENTS ON SITE CAN CAUSE DELAYS IN COMPLETION
    OR EVEN IN A WORST CASE SCENARIO THE TOTAL LOSS
    OF CONSTRUCTED WORKS, SAY BY FIRE OR FLOOD ETC.
    ACCORDINGLY THE CONTRACTOR MAY BE AT A LOSS DUE
    TO HAVING TO CONTINUE TO REMUNERATE WORKERS AND
    PAY CONTINUING HIRE CHARGES FOR PLANT AND
    MACHINERY DAMAGED IN THE EVENT. THE CONTRACTOR
    WILL AS A RESULT BE OUT OF POCKET AS HE WILL NOT
    BE ABLE TO RECOUP THE INCREASED COSTS. COVER FOR
    SUCH LOSSES IS AVAILABLE IN THE MARKET BUT
    SUBJECT TO A TIME EXCLUSION AND INDEMNITY PERIOD,
    THE PREMIUM CHARGE IS NOT CHEAP.

69
ADVANCE LOSS OF RENT OR INTEREST
  • THIS COVER IS MAINLY DIRECTED AT EMPLOYERS, BEING
    PROPERTY OWNERS OR DEVELOPERS, WHO MAY SUFFER
    RENT LOSSES DUE TO DELAYED OR NON COMPLETION OF
    THE WORKS. PART OF THE FEASABILITY STUDY BEFORE
    ENTERING INTO ANY CONTRACT FOR CONSTRUCTION, OR
    EVEN PURCHASING THE LAND, THE EMPLOYER EVALUATES
    THE OVERALL COST TO HIM AND AT WHAT POINT HE WILL
    START TO RECEIVE EARNINGS FROM HIS INVESTMENT.
    IT MUST BE REMEMBERED THAT HE IS EITHER USING HIS
    OWNN FINANCE OR HE IS TAKING OUT LOANS TO COVER
    THE COST OF DEVELOPMENT IN EITHER CASE HE IS
    EITHER LOSING INTEREST ON VESTED CAPITAL OR HE IS
    PAYING INTEREST ON THE LOAN. THE CONSTRUCTION
    PERIOD IS THUS VITAL TO HIS POTENTIAL COST

70
ADVANCE PROFITS OR DELAYED START-UP - 1
  • THIS COVER IS ALLIGNED MAINLY TO PRODUCTION
    PROCESSES. INVESTORS WHO PUT MONEY INTO A
    VENTURE DO SO FOR THE PURPOSE OF INCREASING THEIR
    WEALTH THROUGH SUCH INVESTMENT, ACCORDINGLY, THEY
    EXPECT THE EARNINGS OF THE VENTURE TO COMMENCE ON
    SCHEDULE
  • THE VENTURE MAY BE AN INDUSTRIAL MANUFACTURING
    PROCESS, MINING OR A CHEMICAL OR PETRO-CHENICAL
    FACILITY
  • IRRESPECTIVE OF THE NATURE OF THE VENTURE, WHEN
    THE OPERATIONS RUN LATE, THIS BRINGS ABOUT AN
    UNEXPECTED LOSS TO THE INVESTOR. HAPPILY, HE CAN
    INSURE AGAINST THIS EVENTUALITY UNDER AN ADVANCE
    PROFITS POLICY
  • THE ADVANCE PROFITS POLICY IS ONLY TRIGGERED BY
    AN INDEMNIFIABLE EVENT UNDER THE CONSTRUCTION
    POLICY.

71
ADVANCE PROFITS OR DELAYED START-UP - 2
  • THE SUM INSURED UNDER THIS POLICY IS A FIXED
    AMOUNT BASED ON THE EXPECTED EARNINGS OF THE
    BUSINESS DURING THE PERIOD OF INDEMNITY SAY 12
    MONTHS, THE COVER IS SUBJECT TO AVERAGE.
  • THERE IS, HOWEVER, A DEDUCTIBLE APPLICABLE TO THE
    INDEMNITY, THIS IS A TIME EXCLUSION WHICH IS
    USUALLY QUITE LENGTHY FOR COMPLEX PRODUCTION
    PROCESSES AND MINING, THIS COULD EXTEND TO THREE
    MONTHS, MOST STANDARD TRIED AND TESTED PROCESSES
    WOULD HAVE A 1 TO 3 WEEK EXCLUSION PERIOD, BUT
    NEVER LESS THAN 3 DAYS.
  • SOME PROCESSES SUCH AS PETRO-CHEMICAL RISKS HAVE
    AN EXCLUSION OF COVER DURING THE FIRST 7 DAYS OF
    TESTING, IN OTHER WORDS ANY ACCIDENT OR FAILURE
  • DURING THE FIRST 7 OPERATING DAYS, WHILE COVERED
    UNDER THE WORKS POLICY WOULD NOT QUALIFY FOR
    INDEMNITY UNDER THE ADVANCE PROFITS POLICY.

72
ADVANCE PROFITS OR DELAYED START-UP - 3
  • CLEARLY, THE COVER MUST BE BASED ON A REALISTIC
    COMPLETION DATE (DATE ON WHICH COMMERCIAL
    PRODUCTION IS EXPECTED TO COMMENCE).
  • THE CLIENT HAS AN OBLIGATION TO KEEP THE INSURER
    INFORMED ON OCCURRENCES AND EVENTS THAT MAY
    HAPPEN OR OCCUR THAT WOULD DELAY OR RETRACT THE
    COMPLETION DATE, THUS AFFECTING THE COVER UNDER
    THE POLICY. THE INSURER IS GIVEN ACCESS TO THE
    CONSTRUCTION SITE AT ANY REASONABLE TIME TO
    ENSURE THE WORK IS BEING UNDERTAKEN UNDER GOOD
    ENGINEERING PRACTICES AND TO QUANTIFY THE
    COMPLETION DATES OF INDIVIDUAL COMPONENTS AND THE
    INTEGRITY OF THE PROJECT AS A WHOLE.
  • THE INSURER ALSO HAS THE RIGHT TO TAKE OVER AND
    CONTROL ANY REPAIR OR REPLACEMENT PROCEDURE TO
    ENSURE THAT THE WORK IS UNDERTAKEN EXPEDITIOUSLY
    AND TO PROPER STANDARDS OF ENGINEERING EXCELLENCE.

73
BONDS - 1
  • CONTRACTORS ARE INVARIABLY REQUIRED TO PROVIDE
    CERTAIN TYPES OF BOND OR GUARANTEE. THE
    PROVIDERS OF THESE BONDS OR GUARANTEES ARE EITHER
    A BANK OR INSURANCE COMPANY. THE MOST USUAL
    BONDS ARE
  • PERFORMANCE BONDS THIS IS ONE OF THE MOST
    IMPORTANT BONDS GIVEN BY A CONTRACTOR, IT IS
    FURNISHED BY THE CONTRACTOR BEFORE THE START OF
    THE CONTRACT. ITS SOLE PURPOSE IS TO PROTECT THE
    EMPLOYER AGAINST BREECH OF CONTRACT BY THE
    CONTRACTOR
  • BID OR TENDER BOND THIS BOND IS SUBMITTED BY
    THE CONTRACTOR WITH HIS BID OR TENDER, THUS
    SHOWING THE EMPLOYER THAT HIS BID IS REASONABLE
    AND IF ACCEPTED THE CONTRACTOR WILL SIGN A
    CONTRACT TO PERFORM THE WORK INCLUDING ANY BOND
    REQUIREMENTS. THE BOND IS FORFEITED IN FAVOUR OF
    THE EMPLOYER IF THE CONTRACTOR FAILS TO PERFORM
    THE WORKS SPECIFIED IN THE TENDER

74
POINTS TO BE AWARE OF 1SITE PREPARATION AND
CLEARANCE
  • SOUNDS QUITE INNOCUOUS DOESNT IT???
  • NOT TOO SERIOUS IF IT INVOLVES REMOVAL OF
    UNDERGROWTH AND THE LIKE FOR THE MAKING OF A
    ROAD
  • WHAT IF THE SITE CLEARANCE EMBRACES BUILDING
    DEMOLISHMENT OR MACHINERY DISMANTLING OR
    REMOVAL??
  • SAY FOR EXAMPLE THE BUILDINGS WER
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