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Construction Insurance and UK Construction Contracts

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APPENDIX 6

JCT Intermediate Building Contract 2011

Section 6 - injury, damage and insurance

Injury to persons and property

Liability of Contractor - personal injury or death

6.1 The Contractor shall be liable for, and shall indemnify the Employer against, any expense, liability, loss, claim or proceedings whatsoever in respect of personal injury to or the death of any person arising out of or in the course of or caused by the carrying out of the Works, except to the extent that the same is due to any act or neglect of the Employer, of any of the Employer’s Persons or of any Statutory Undertaker.

Liability of Contractor - injury or damage to property

6.2 The Contractor shall be liable for, and shall indemnify the Employer against, any expense, liability, loss, claim or proceedings in respect of any loss, injury or damage whatsoever to any property real or personal in so far as such loss, injury or damage arises out of or in the course of or by reason of the carrying out of the Works and to the extent that the same is due to any negligence, breach of statutory duty, omission or default of the Contractor or of any of the Contractor’s Persons. This liability and indemnity is subject to clause 6.3 and, where Insurance Option C (Schedule 1, paragraph C.1) applies, excludes loss or damage to any property required to be insured thereunder caused by a Specified Peril.

Injury or damage to property - Works and Site Materials excluded

6.3.1 Subject to clauses 6.3.2 and 6.3.3, the reference in clause 6.2 to ‘property real or personal’ does not include the Works, work executed and/or Site Materials up to and including whichever is the earlier of:
  • 6.3.1.1 the date of issue of the Practical Completion Certificate, or
  • 6.3.1.2 the date of termination of the Contractor’s employment.
6.3.2 Where a Section Completion Certificate is issued in respect of a Section, that Section shall not after the date of issue of that certificate be regarded as ‘the Works’ or ‘work executed’ for the purpose of clause 6.3.1. 6.3.3 If clause 2.25 has been operated, then, after the Relevant Date, the Relevant Part shall not be regarded as ‘the Works’ or ‘work executed’ for the purpose of clause 6.3.1.

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Insurance against personal injury and property damage

Contractor’s insurance of his liability

6.4.1 Without prejudice to his obligation to indemnify the Employer under clauses 6.1 and 6.2, the Contractor shall take out and maintain insurance in respect of claims arising out of his liability referred to in clauses 6.1 and 6.2 which: 6.4.2 As and when reasonably required to do so by the Employer, the Contractor shall send to the Architect/Contract Administrator for inspection by the Employer documentary evidence that the insurances required by clause 6.4.1 have been taken out and are being maintained, and at any time the Employer may (but shall not unreasonably or vexatiously) require that the relevant policy or policies and related premium receipts be sent to the Architect/Contract Administrator for such inspection. 6.4.3 If the Contractor defaults in taking out or in maintaining insurance in accordance with clause 6.4.1 the Employer may himself insure against any liability or expense which he may incur as a result of such default and the amount paid or payable by him in respect of premiums therefor may be deducted from any sums due or to become due to the Contractor under this Contract or shall be recoverable from the Contractor as a debt.

Contractor’s insurance of liability of Employer

6.5.1 If the Contract Particulars state that insurance under clause 6.5.1 may be required, the Contractor shall, if instructed by the Architect/Contract Administrator, take out a policy of insurance in the names of the Employer and the Contractor3 for the amount of indemnity there stated in respect of any expense, liability, loss, claim or proceedings which the Employer may incur or sustain by reason of injury or damage to any property caused by collapse, subsidence, heave, vibration, weakening or removal of support or lowering of ground water arising out of or in the course of or by reason of the carrying out of the Works, excluding injury or damage:
  • 6.5.1.1 for which the Contractor is liable under clause 6.2; or
  • 6.5.1.2 which is attributable to errors or omissions in the designing of the Works; or
  • 6.5.1.3 which can reasonably be foreseen to be inevitable having regard to the nature of the work to be executed and the manner of its execution; or
  • 6.5.1.4 (if Insurance Option C applies) which it is the responsibility of the Employer to insure under paragraph C.1 of Schedule 1; or

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    6.5.1.5 to the Works and Site Materials except where the Practical Completion Certificate has been issued or in so far as any Section is the subject of a Section Completion Certificate; or
  • 6.5.1.6 which arises from any consequence of war, invasion, act of foreign enemy, hostilities (whether war is declared or not), civil war, rebellion or revolution, insurrection or military or usurped power; or
  • 6.5.1.7 which is directly or indirectly caused by or contributed to by or arises from the Excepted Risks; or
  • 6.5.1.8 which is directly or indirectly caused by or arises out of pollution or contamination of buildings or other structures or of water or land or the atmosphere happening during the period of insurance, save that this exception shall not apply in respect of pollution or contamination caused by a sudden identifiable, unintended and unexpected incident which takes place in its entirety at a specific moment in time and place during the period of insurance (all pollution or contamination which arises out of one incident being considered for the purpose of this insurance to have occurred at the time such incident takes place); or
  • 6.5.1.9 which results in any costs or expenses being incurred by the Employer or in any other sums being payable by the Employer in respect of damages for breach of contract, except to the extent that such costs or expenses or damages would have attached in the absence of any contract.
6.5.2 Any insurance under clause 6.5.1 shall be placed with insurers approved by the Employer, and the Contractor shall send to the Architect/Contract Administrator for deposit with the Employer the policy or policies and related premium receipts. 6.5.3 The amounts expended by the Contractor to take out and maintain the insurance referred to in clause 6.5.1 shall be added to the Contract Sum.

Excepted risks

6.6 Notwithstanding clauses 6.1, 6.2 and 6.4.1, the Contractor shall not be liable either to indemnify the Employer or to insure against any personal injury to or the death of any person or any damage, loss or injury to the Works, Site Materials, work executed, the site, or any other property, caused by the effect of an Excepted Risk.

Insurance of the works

Insurance options

6.7 Insurance Options A, B and C are set out in Schedule 1. The Insurance Option that applies to this Contract is that stated in the Contract Particulars.4

Related definitions

6.8 In Schedule 1 and, so far as relevant, in the clauses of these Conditions the following phrases shall have the meanings given below:

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All Risks Insurance5: insurance which provides cover against any physical loss or damage to work executed and Site Materials and against the reasonable cost of the removal and disposal of debris and of any shoring and propping of the Works which results from such physical loss or damage but excluding the cost necessary to repair, replace or rectify:
  • (a) property which is defective due to:
    • (i) wear and tear,
    • (ii) obsolescence, or
    • (iii) deterioration, rust or mildew;
  • (b) any work executed or any Site Materials lost or damaged as a result of its own defect in design, plan, specification, material or workmanship or any other work executed which is lost or damaged in consequence thereof where such work relied for its support or stability on such work which was defective6;
  • (c) loss or damage caused by or arising from:
    • (i) any consequence of war, invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, military or usurped power, confiscation, commandeering, nationalisation or requisition or loss or destruction of or damage to any property by or under the order of any government de jure or de facto or public, municipal or local authority,
    • (ii) disappearance or shortage if such disappearance or shortage is only revealed when an inventory is made or is not traceable to an identifiable event, or
    • (iii) an Excepted Risk.
Excepted Risks: the risks comprise:
  • (a) ionising radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel, radioactive toxic explosive or other hazardous properties of any explosive nuclear assembly or nuclear component thereof (other than such risk insofar, but only insofar, as it is included in the Terrorism Cover from time to time required to be taken out and maintained under this Contract);
  • (b) pressure waves caused by aircraft or other aerial devices travelling at sonic or supersonic speeds; and
  • (c) any act of terrorism that is not within the Terrorism Cover from time to time required to be taken out and maintained under this Contract.
Joint Names Policy: a policy of insurance which includes the Employer and the Contractor as composite insured and under which the insurers have no right of recourse against any person named as an insured, or, pursuant to clause 6.9, recognised as an insured thereunder.

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Pool Re Cover: such insurance against loss or damage to work executed and Site Materials caused by or resulting from terrorism as is from time to time generally available from insurers who are members of the Pool Reinsurance Company Limited scheme or of any similar successor scheme.7 Specified Perils: fire, lightning, explosion, storm, flood, escape of water from any water tank, apparatus or pipes, earthquake, aircraft and other aerial devices or articles dropped therefrom, riot and civil commotion, but excluding Excepted Risks. Terrorism Cover: Pool Re Cover or other insurance against loss or damage to work executed and Site Materials (and/or, for the purposes of clause 6.11.1, to an existing structure and/or its contents) caused by or resulting from terrorism.

Sub-contractors - Specified Perils cover under Joint Names All Risks Policies

6.9.1 The Contractor, where Insurance Option A applies, and the Employer, where Insurance Option B or C applies, shall ensure that the Joint Names Policy referred to in paragraph A.1, A.3, B.1 or C.2 of Schedule 1 shall either:
  • 6.9.1.1 provide for recognition of each sub-contractor as an insured under the relevant Joint Names Policy; or
  • 6.9.1.2 include a waiver by the relevant insurers of any right of subrogation which they may have against any such sub-contractor

in respect of loss or damage by the Specified Perils to the Works or relevant Section, work executed and Site Materials and that this recognition or waiver shall continue up to and including the date of issue of any certificate or other document which states that in relation to the Works, the sub-contractor’s works are practically complete or, if earlier, the date of termination of the sub-contractor’s employment. Where there are Sections and the sub-contractor’s works relate to more than one Section, the recognition or waiver for such sub-contractor shall nevertheless cease in relation to a Section upon the issue of such certificate or other document for his work in that Section.

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