“Why is Insurance Paramount in the Construction · PDF file“Why is Insurance Paramount in the Construction Arena" 4th EPMIF AN EIMS PRESENTATION Cas Hansa March 2009 ... • •

“Why is Insurance Paramount in the “Why is Insurance Paramount in the Construction Arena"Construction Arena"

4th EPMIF4th EPMIF

AN EIMS PRESENTATION AN EIMS PRESENTATION Cas HansaCas Hansa

March 2009March 2009

•• ““A 'thumbnail' view of the scope of a typical A 'thumbnail' view of the scope of a typical Contractor's All Risks (projects works) Contractor's All Risks (projects works) insurance policy.insurance policy.

•• Key projectKey project--works risk parameters will be works risk parameters will be discussed and contextualised for both the discussed and contextualised for both the FidicFidic and NEC contract formats.and NEC contract formats.

•• A 'tour' of the recently developed Eskom A 'tour' of the recently developed Eskom Insurance internet/website Insurance internet/website -- a knowledge centre a knowledge centre -- of the projectof the project--works insurance programmes for works insurance programmes for Dx, Tx and Gx will be presented.Dx, Tx and Gx will be presented.

•• The presentation will conclude with the The presentation will conclude with the necessary steps to follow in the event of loss or necessary steps to follow in the event of loss or damage experiences on site.damage experiences on site.

Synopsis

Introduction to Contractor’s All Risk (CAR) Insurance

Source: The Council on Tall Buildings and Urban Habitat

Projects Insurable under a Contractor’s All Risk Policy

Bridges


Tunnels

Projects Insurable under Contractors’ All Risk Policy

Pipeline construction


Paper Millwww.dcsc.tudelft.nl/.../paper-mill-a1.jpg

Projects Insurable under Contractor’s All Risk Policy

Wind TurbinesSource: Vestas.com


Semiconductor PlantsSource: Samsung Electronics Co., South Korea


Gas Turbine Power PlantSource: Siemens.com


Complete Thermal Power Plants


Chemical Plants

Exposures

Contractor accidentally burst water main

Accidental Damage to the Works and to Third Party Property (the Municipal main/pipe and the neighbour’s property

Exposures

Third Party Liability damage to Building and Boundary Wall

Mr Noah, don’t you think the prophesies of a global climate change are a bit exaggerated?

Exposures: ‘Acts of God’

http://www.educatorscorner.com/tools/lectures/cartoons/index.shtml

Exposures

SASRIA damage to Sports Facility

Exposures

Concrete spillage damage to ‘Rolls Royce’ (Third Party Prpty)

Exposures

Concrete spillage damage to ‘Rolls Royce’ (Third Party Prpty)

Exposures

Consequential Loss vs a TPL Deterioration of Stock Loss

Note: The (CAR) Works policy does NOT cover consequential loss such as loss of profits, penalties, time delays, loss of income, etc.

However, if ‘legally liable’ the TPL Section of the CAR Policy will respond to loss or damage caused to Third Party Property, eg negligent, accidental damage to a Power Cable

Exposures

Theft of Materials

Exposures

Theft of Materials

Exposures

Fire Damage to Equipment [or SASRIA damage?]


Works; Surrounding Property; Employer’s Property; Third Party Liability; Equipment.

KEY INSURANCE ISSUE:KEY INSURANCE ISSUE:EXCLUSION OF DEFECTIVE DESIGN: PERIOD!EXCLUSION OF DEFECTIVE DESIGN: PERIOD!

INSURERS PAY ESKOM FOR CONSEQUENTIAL MATERIALINSURERS PAY ESKOM FOR CONSEQUENTIAL MATERIALDAMAGES (WORKS FREE OF DEFECT) BUT MAINTAINDAMAGES (WORKS FREE OF DEFECT) BUT MAINTAINRIGHTS TO RECOVER FROM RIGHTS TO RECOVER FROM ‘‘DEFAULTINGDEFAULTING’’PROFESSIONAL DESIGN TEAM.PROFESSIONAL DESIGN TEAM.

ESKOM ON THE OTHER HAND IS CONTRACTUALLY ESKOM ON THE OTHER HAND IS CONTRACTUALLY OBLIGED TO LIMIT THEIR LIABILITY WITH THEOBLIGED TO LIMIT THEIR LIABILITY WITH THEPROFESSIONAL DESIGN TEAM. AND EVEN IF ESKOMPROFESSIONAL DESIGN TEAM. AND EVEN IF ESKOM‘‘FORCEDFORCED’’ UNLIMITED INDEMNITY, THE EXHORBITANTUNLIMITED INDEMNITY, THE EXHORBITANTCOST FOR THE PROFESSIONAL DESIGN TEAMCOST FOR THE PROFESSIONAL DESIGN TEAM’’SS‘‘PROFESSIONAL INDEMNITYPROFESSIONAL INDEMNITY’’ INSURANCES WILL BEINSURANCES WILL BEPASSED BACK TO ESKOM.PASSED BACK TO ESKOM.SITUATION UNTENABLE: DISCUSSIONS UNFOLDING. SITUATION UNTENABLE: DISCUSSIONS UNFOLDING.

KEY INSURANCE ISSUE:KEY INSURANCE ISSUE:EXCLUSION OF (ORIGINAL EQUIPMENT MANUFACTURE EXCLUSION OF (ORIGINAL EQUIPMENT MANUFACTURE ––OEM) DEFECTIVE MATERIAL AND WORKMANSHIPOEM) DEFECTIVE MATERIAL AND WORKMANSHIPOUTSIDE OF THE WORK AREAS:OUTSIDE OF THE WORK AREAS:

INSURERS PAY ESKOM FOR CONSEQUENTIAL MATERIALINSURERS PAY ESKOM FOR CONSEQUENTIAL MATERIALDAMAGES BUT MAINTAIN RIGHTS TO RECOVER FROMDAMAGES BUT MAINTAIN RIGHTS TO RECOVER FROMTHE THE ‘‘OEMOEM’’..BUT, ESKOM BEING CONTRACTUALLY OBLIGED TO LIMITBUT, ESKOM BEING CONTRACTUALLY OBLIGED TO LIMITTHEIR LIABILITY WITH THETHEIR LIABILITY WITH THEPROCUREMENT/SUPPLIER/CONTRACTOR AND EVEN IF PROCUREMENT/SUPPLIER/CONTRACTOR AND EVEN IF ESKOM ESKOM ‘‘FORCEDFORCED’’ UNLIMITED INDEMNITY, THE UNLIMITED INDEMNITY, THE EXHORBITANT COSTS FOR THE EXHORBITANT COSTS FOR THE ‘‘OEMOEM’’SS’’ ‘‘PRODUCT PRODUCT LIABILITYLIABILITY’’ INSURANCES WILL BE PASSED BACK TOINSURANCES WILL BE PASSED BACK TOESKOM.ESKOM.SITUATION UNTENABLE: DISCUSSIONS UNFOLDING. SITUATION UNTENABLE: DISCUSSIONS UNFOLDING.

NEC CONTEXT:NEC CONTEXT:Risk > Indemnity > Limits of Liability > Insurance

[Refer Typical NEC ECC3 (Eskom) Contractual Wording]

FIDIC CONTEXT:FIDIC CONTEXT:Risk > Indemnity > Limits of Liability > Insurance

[Refer Typical Fidic (Eskom) Contractual Wording]

Internet Repository

http://www.eskom.co.za/live/content.php?Item_ID=9248

Format A Policies and Procedures: [Generally Tx Projects and all Projects < than R350million]

Format A Project Works (Annual Contractor's All Risks) Master Insurance Policy SASRIA Master Policy Format A Marine Insurance Policy Marine Policies and Procedures Format A Works Insurances Guidance Schedule


Internet Repository Cont’d.


Similarly, Format B Policies and Procedures: [Generally Gx Projects and ‘Complex’-Projects > than R350million]

Similarly, Format Dx Policies and Procedures: [Generally all Dx Projects unless declared otherwise by EIMS]

Similarly, Format Engineering Construction Short Contract (ECSC3) Policies and Procedures.




Format B/Dx/ECSC3 Project Works (Annual Contractor's All Risks) Master Insurance Policy SASRIA Master Policy Format B/Dx/ECSC3 Marine Insurance Policy Marine Policies and Procedures Format B/Dx/ECSC3 Works Insurances Guidance Schedule




Claims Handling Policies and Procedures:

General Claims-Handling Flowchart

Marine-Specific Claims Handling Procedures

Works Damage Claim Form Third Party Liability Claim Form SASRIA Claim Form




Professional Services Contract Guidance Notes

Contract Works Engineering Insurance Training Manual

Marine Insurance Training Manual

General Insurance Guidance Notes

Eskom Insurance Management Services (EIMS) Contact Details


Internet Repository Cont’d.Claims Handling Process Chart

JOH-ESK002-20050922-JvW-P2

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Thank You

Documents

“Why is Insurance Paramount in the Construction · PDF file“Why is Insurance Paramount in the Construction Arena" 4th EPMIF AN EIMS PRESENTATION Cas Hansa March 2009 ... • •