Construction Insurance and UK Construction Contracts
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CHAPTER 18
Contract insurance under JCT Intermediate Building Contract 2011
General
18.1 As its name suggests, the JCT Intermediate Building Contract (IC11) is designed to sit between the lengthy Standard Building Contract (SBC11) and the relatively brief Minor Works Building Contract (MW11). The introduction to the contract states that the IC11 is appropriate where the proposed building works are of simple content involving the normal recognised basic trades and skills of the industry without building service installation of a complex nature or other complex specialist work. 18.2 The IC11 is not suitable for contracts where the contractor is to design discrete part(s) of the works. Where the contractor is to undertake design, and the other criteria for selection of IC11 are met, the Intermediate Building Contract with Contractor’s Design (ICD11) should be selected. As the name suggests, this is the IC form with a contractor’s designed portion incorporated. As such, it is suitable where the employer is generally responsible for the design of the works, but where the contractor is required to design discrete sections of the works. That being the case, it is not appropriate for use as a “design and build” contract. The insurance provisions in IC11 and ICD11 are the same in all material respects, save where expressly identified below. 18.3 The insurance provisions of IC11 are almost identical to those in SBC11, and the differences are attributable solely to the different nature of the two forms of contract. Accordingly reference should be made to as regards the interpretations of the insuring provisions.Relevant provisions in the contract
18.4 In summary, the main provisions in IF11 relevant to insurance are provided for as follows:- Clause 6.1: the contractor is to indemnify the employer against claims in respect of death or personal injury arising out of the works, except to the extent that the employer is itself at fault.
- Clause 6.2: a similar indemnity is to be provided by the contractor to the employer in respect of damage to property real or personal, other than damage to the works and to site materials, but only in so far as it results from the fault of the contractor.
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Clause 6.4.1: the liability of the contractor in respect of the above indemnities is to be insured by the contractor; in addition, by clause 6.5.1, the employer may insist upon insurance in the joint names of the employer and contractor being procured by the contractor in respect of loss of or damage to property not caused by the fault of the contractor.1Page 273
- Clause 6.5.1: where the contract particulars state that clause 6.5.1 insurance may be required, the contractor shall take out such insurance upon being instructed to do so in joint names of employer and contractor.
- Clauses 6.10-6.11: address the provision of terrorism cover, and the effect of the same being unavailable.
- Clauses 6.12-6.15: requires both parties to comply with the Joint Fire Code.
- A and B: in the case of new buildings, insurance of the works is to be effected either by the contractor (Option A), or by the employer (Option B), under an all risks policy in the joint names of the employer and contractor, which leave the residual risk of any under insurance with the contractor and the employer, respectively.
- C: where there are existing buildings, insurance is to be effected by the employer in the joint names of the employer and contractor of the existing structures against specified perils and of the works, against all risks.
Specific clauses
Section 6 - clauses 6.1 to 6.3
Injury to persons and property
18.7 Apart from references being to the practical completion statement rather than the practical completion certificate, clauses 6.1 to 6.3 of IF11 are identical to those of SB11.2
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Section 6 - clauses 6.4.1 to 6.6
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Insurance against personal injury and property damage
18.8 Apart from references in clause 6.4.2 being to the employer rather than the architect/contract administrator, clause 6.4 of DB11 is identical to clause 6.4 of SB11.3 18.9 Clause 6.5 of IF11 is in identical terms to clause 6.5 of SB11.Section 6 - clauses 6.7 to 6.11
Insurance of the works
18.10 The insurance options of IF11 are identical to those of SB11.4 18.11 Clauses 6.8 to 6.11 are identical to those of SB11.Section 6 - clauses 6.12 to 6.15
18.12 As there is no requirement for professional liability insurance in IC11, Clauses 6.12 to 6.15 correspond to clauses 6.14 to 6.17 of SB11.5 In the ICD11 form, the clause numbering corresponds precisely.The insurance options
Schedule 3 - Option A
18.13 Option A concerns the insurance of new buildings by the contractor and is in materially identical terms to option A of SB11.6 18.14 Save for the reference to the architect or contract administrator being replaced by references to the employer, clauses A.2 and A.3 are in materially identical terms to clauses A.2 and A.3 of SB11. 18.15 Again, save for the reference to the architect or contract administrator being replaced by references to the employer, clause A.4 is in materially identical terms to clause A.4 of SB11. 18.16 Clause A.5 is in identical terms to its counterparts in SB11.Schedule 3 - Option B
18.17 Option B concerns the insurance of new buildings by the employer and is in materially identical terms to option B of SB11.7 18.18 Clauses B.2 and B.3 are in materially identical terms to their counterparts in SB11.
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Schedule 3 - Option C
18.19
Option C concerns the insurance of existing structures and works or extensions to them by the employer and is in materially identical terms to option C of SB11.8
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Subcontractors
18.20 Whilst the provisions of IF11 in relation to subcontractors are in materially identical terms to those of SB119 an important extension is provided for by clause 6.9.3 of IF11 such that where option C applies the requirement for named subcontractors to be recognised as an insured under the policy is extended to the insurance of existing structures and contents (as opposed to being limited to the all risks policy).
1 By clause 6.4.2, the employer has the right to request that the contractor provide documentary evidence that the insurances required by clause 6.4.1 have been taken out. In the event the contractor defaults in taking out or maintaining insurance in accordance with clause 6.4.1, by clause 6.4.2 the employer may himself insure those liabilities with the cost of the premiums being recoverable either under the contract or as a debt.