Contractors Liability
And what it covers
Types of Insurance Policies
Typically, there are two types of policies for those in the construction industry:
Contractors’ All Risks (CAR) insurance provides coverage for material damage to the works under construction, and can be extended to also cater for third-party property damage and injury losses.
Erection All Risks (EAR) Insurance offers comprehensive coverage for the erection of plant and machinery and can also be extended to include third party liability related to work conducted on site.
Which insurance policy you need will depend largely on the type of building project you are planning. In general terms, if the main purpose of the work is the construction of buildings or other structures such as dams, roofing, foundations or alteration work, a CAR policy is ideal. An EAR policy should be considered if the main purpose of the job is the erection, installation and commissioning of plant machinery or equipment. In some cases, the project involves both types of work in which case the policy could be tailored to your needs.
The Contract Conditions come in many forms, the most commonly used by the South African construction industry, are the Joint Building Contract Committee (JBCC – various versions); FIDIC (5 Books); NEC3 and GCC. Again, depending on many aspects, different Contract Conditions for different types of contracts.
Some specific clauses and indemnity in the Contract Works policies are:
(The policy can be extended to include the following (just to mention a few):
Damage to surrounding property
Cost of removal of debris after an incident
Loss or damage during inland transit
Loss of or damage to contract works while in temporary storage
Damage during testing and commissioning of equipment
Professional Fees
Property taken over
Road reserve and servitude
Fire Brigade / Public Authorities
Beneficial Occupation
Difference in Excess / Difference in Conditions (Principal Controlled Insurance)
Work away
As a general rule, most policies do not provide indemnity for :
Normal wear and tear
Wilful negligence or poor / defective workmanship
Fines and Penalties
Consequential Loss
Loss or damage during transit by sea or air
Loss or damage directly or indirectly arising from pollution or contamination
War invasion or acts of terrorism causing damages
Radioactive contamination from any nuclear fuel or nuclear waste
Damage to any computer or other equipment which processes or stores data
Sanctions
Confiscation, nationalisation, expropriation and abandonment
Design of the works
Professional Indemnity
Products Liability
Riot & Strike outside RSA and Namibia
In addition to the above, some very important “add-on” sections / extensions to the Contract Works and Liability Insurance:
Advanced Consequential Loss / Project Delay
Removal of Lateral Support
Spread of Fire