Construction Insurance and UK Construction Contracts

Marshall Levine and Roger ter Haar KC

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CHAPTER 25 I Mech E/IET Model Form of Contract MF/1 (REV 6)/2014

General

25.1 The IMechE issues model forms (with forms of tender, agreement and performance bond included) and guides jointly with the Institution of Engineering and Technology. There are four model forms:

Model form of contract for the design, supply and installation of electrical, electronic and mechanical plant including special conditions for the ancillary development of software: MF/1 (Revision 6) 2014 edition
Home or overseas contracts for the supply of electrical, electronic or mechanical plant: MF/2 (Revision 1) 1999 edition
Home contracts for the supply of electrical and mechanical goods: MF/3 (Revision 1) 2001 edition
Home or overseas agreements for the provision of consultancy services by engineering consultants: MF/4 2003 edition.

25.2 In this chapter we consider MF/1. The employer under MF/1 is called the purchaser, and his main representative is the engineer.

MF1/Revision 6 (2014) General

25.3 The clauses relevant to risk and insurance are:

Clause 43: Accidents and Damage;
Clause 47: Insurance; and
Clause 48: Failure to Insure and Joint Insurances.

It is useful to compare the nature of the risk allocation with the insurance provision, and as such these three clauses are addressed by reference to (a) overarching obligations (b) care of the works (c) accidents and injuries.

Specific clauses

Overarching insurance provisions

25.4 The contractor is obliged to seek the approval of the purchaser (whose approval shall not be unreasonably withheld) as to both the identity of the insurer and the policy terms: see clause 47.6. This clause also provides that the contractor shall produce the policy and receipts for the premiums “or other satisfactory

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evidence of insurance cover” when so requested by the engineer. Unsurprisingly, given the requirement that the purchaser approve the policy wording, the contractor is required to notify the purchaser of any alteration to the terms of the policy or in the amounts for which insurance is provided. 25.5 Sub-clause 47.7 provides that the contractor’s (and subcontractors’) insurances under clause 47 may exclude cover for a number of matters, such as purchaser’s risks (including force majeure, except as mentioned in sub-clause 45.1, last paragraph) and risks that should be covered by compulsory motor insurance. 25.6 In the event that the contractor fails to effect and maintain the insurances he is required to effect under the policy, clause 48.1 permits the purchaser to effect the “missing” insurance and to deduct the sum paid by way of premium from any monies due or that may become due to the contractor or to recover the same as a debt. 25.7 Clause 48.2 makes specific provision for when the contract requires joint names insurance:

Wherever insurance is arranged under the Contract in the joint names of the parties, or on terms containing provisions for indemnity to principals, the party effecting such insurance shall procure that the subrogation rights of the insurers against the other party are waived and that such policy shall permit either:

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