Construction insurance types

Usually seen as a particularly esoteric form of insurance, this cover is rarely understood fully although often used. It dates from a 1958 judgment – Gold v Patman & Fotheringham – and is a provision predominantly only to be found within the JCT’s standard forms of building contract (in various clause numbers depending upon the contract in use – 21.2.1, 6.2.4, 6.5.1. etc). It requires that the contractor effects non-negligent insurance on behalf of the employer in joint names.

The clause refers to a limited perils liability cover that indemnifies the employer alone in respect of damage to property other than the contract works arising out of a limited list of perils and caused by or arising out of the execution of these works.  The insurance does not offer any protection to the contractor even though the contractor is shown as a jointly insured party.

The contractor must be specifically instructed to effect this insurance by the architect/contract administrator and must be advised what limit of indemnity is required. The cost of the insurance is the subject of a provisional sum and this cost is fully reimbursed to the contractor under the contract.

Where a contractor is liable for design either by a design and build contract or by a design portion supplement, the contract sum should include an allowance for the cost of 6.5.1 insurance. No additional reimbursement is allowed by the contract.