This document discusses various insurances that are required for construction projects. It states that projects face unlimited risks from start to completion, so owners and contractors transfer risk to insurance companies through applicable policies. The mandatory insurances for construction projects discussed are Contractor's All Risk (CAR) or Erection All Risk (EAR) policies, third party liability insurance, workmen's compensation insurance, professional indemnity insurance, and contractors plant equipment and machinery insurance. The document provides details on the coverage and exclusions of CAR/EAR policies and important points to consider when securing these policies.
This document discusses various insurances that are required for construction projects. It states that projects face unlimited risks from start to completion, so owners and contractors transfer risk to insurance companies through applicable policies. The mandatory insurances for construction projects discussed are Contractor's All Risk (CAR) or Erection All Risk (EAR) policies, third party liability insurance, workmen's compensation insurance, professional indemnity insurance, and contractors plant equipment and machinery insurance. The document provides details on the coverage and exclusions of CAR/EAR policies and important points to consider when securing these policies.
This document discusses various insurances that are required for construction projects. It states that projects face unlimited risks from start to completion, so owners and contractors transfer risk to insurance companies through applicable policies. The mandatory insurances for construction projects discussed are Contractor's All Risk (CAR) or Erection All Risk (EAR) policies, third party liability insurance, workmen's compensation insurance, professional indemnity insurance, and contractors plant equipment and machinery insurance. The document provides details on the coverage and exclusions of CAR/EAR policies and important points to consider when securing these policies.
PROJECT INSURANCES • Why We need to Insure a Project. • Insurances are required for every single construction project, as all Projects having unlimited risks occurring loss or Damage from the commencement to the completion.
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PROJECT INSURANCES • Why We need to Insure a Project. • Neither Owner nor Contractor couldn’t bear the risk of • Hence Owners & Damages as generally Contractors intend to the damages are huge. transfer the risk of Project to the Insurance Company by securing a APPLICABLE insurance Policy
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PROJECT INSURANCES • Why We need to Insure a Project. • Moreover, Insuring a • MPW General Condition Project is a Mandatory of Contracts- Article 21- Contractual Insurance of the works- Requirement, by the • FIDIC- Red Book for Client to minimize their Conditions of Contracts risk-As stated in Related for Construction 1999- Project Contract Article # 18 -Insurance Conditions Prepared by Suranga D Alahakoon PROJECT INSURANCES • What type of Insurance to be Selected. • In General according to the Type of Procurement Method the required Type of Insurances are varying. Mostly the specified condition of Contract for the Project, shall specify the type of Required Insurance. • Kuwait Civil Works has to be followed the MPW Condition of Contract Requirements. • Kuwait KOC Contracts has to be followed the KOC General Conditions of Contracts Prepared by Suranga D Alahakoon PROJECT INSURANCES • What type of Insurance to be Selected. • FIDIC –Red Book to follow for the Construction Works • FIDIC-Yellow book or Gold Book to follow for Design and Built Projects
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PROJECT INSURANCES • Mandatory Insurances for A CONSTRUCTION PROJECT • CAR/EAR- Contractor's all risk Policy/ Erection All Risk Policy • TPL-Third Party Liability Insurance • WC-Workmen Compensation Insurance • PI-Professional Indemnity Insurance • CPEM-Contractors Plant Equipment and Machinery
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PROJECT INSURANCES • COVERAGE OF CAR/EAR • It provides coverage for damage to the project under construction and for materials and equipment that are destined for incorporation into the project, including items in storage and in transit to the site. Part II provides liability insurance for third-party bodily injury (BI) and property damage (PD) arising out of the construction operations.
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PROJECT INSURANCES
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PROJECT INSURANCES • CAR- Contractor's all risk Policy
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PROJECT INSURANCES • EAR- Erection All Risk Policy
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PROJECT INSURANCES • What CAR/EAR is not covered. • Particularly the material or equipment inside the Project Premises and inland transit only covered. But the material during the transit out side of the Country is not covered by the CAR/EAR. However these goods are covered during the outland transit by a different insurance coverage in according to method of transit method complying with the International Commercial Terms (INTERCOM) Prepared by Suranga D Alahakoon PROJECT INSURANCES • What CAR/EAR is not covered. • Failures due to negligence design is not covered. • Defective Workmanship and Materials not covered under General CAR Policy, but this could be covered provisionally as per conditions LEG-2& 3 • Loss or Damages to the Contract Works during the Defect Liability Period- If you have Extended Defect Liability Clause, it will be covered only defects arose from your construction failures only.
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PROJECT INSURANCES • What CAR/EAR is not covered. • Some Insurance Policies are not covered the Temporary facilities, in that case Contractor has to include the amount of Temporary facilities separately to include in the Policy. • Some policies are not covered removing of debris. This is a very important part and most of are not aware of this. If Policy not covered the removing of debris, Contractor has to bear the cost of removing debris occurred to a incident and insurance shall pay only for new construction works only. As example; if offices damaged by fire, fired office to be removed and new to be re constructed. If removing of debris are not covered then Contractor can claim for the new Construction.
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PROJECT INSURANCES • What are the Measures can be taken to extend the Insurance coverage ( to include the excluded insurance Clauses ) • In General Project Management are responsible to included the required insurance Clauses as per the Project requirement, with an additional Premium, to avoid any risk. Ex. This facility is available with any insurance coverage and is called as amendments/endorsements.
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PROJECT INSURANCES • What are the Measures can be taken to extend the cover ( to include the excluded insurance Clauses )
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PROJECT INSURANCES • IMPORTANT POINTS TO BE CONSIDERED WHILE SECURING CAR/EAR Policy.
• Major insurance Clauses in the Policy and Clauses to be
additionally included with regards to special tasks as ex. If micro-tunneling is in the Project, this to be specially included as a separate clause. • What are limitation for each incident. As generally it covers the total Project amount , but insurer particularly limit the liability for each incident as per the type of incident. Hence required limitations to be considered. Ex. Clause; Removing of Debris KD 250, 000/- in aggregate.
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PROJECT INSURANCES • IMPORTANT POINTS TO BE CONSIDERED WHILE SECURING CAR/EAR Policy. • Insurance Deductibles- What is this deductibles. Normally every insurer is trying to minimize the insurance claims. Accordingly they set some conditions or limits at each foreseeable risks to control the number of Claims. Deductible is such a condition to limit the claims. If you review any insurance policy you can read the limit of deductible for each stated risk. As example. Prepared by Suranga D Alahakoon PROJECT INSURANCES • IMPORTANT POINTS TO BE CONSIDERED WHILE SECURING CAR/EAR Policy.
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PROJECT INSURANCES • IMPORTANT POINTS TO BE CONSIDERED WHILE SECURING CAR/EAR Policy. • This means that, if any material damaged occurred by act of God, Fire, Water, etc. KD 5000 will deducted from the total payable Claim for each and every liability. If further explains, Contractor has to bear the cost of KD 5000 with regards to this claims.
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PROJECT INSURANCES • IMPORTANT POINTS TO BE CONSIDERED WHILE SECURING CAR/EAR Policy. • Total Amount to be insured . Prior to secure a Insurance policy we have to identify the total amount to be insured.
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PROJECT INSURANCES • IMPORTANT POINTS TO BE CONSIDERED WHILE SECURING CAR/EAR Policy.
In General Project Value only to be insured,
considering escalation (if applicable). Other amounts such as temporary offices, Existing property etc. are insurance extensions.
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PROJECT INSURANCES • IMPORTANT POINTS TO BE CONSIDERED WHILE SECURING CAR/EAR Policy.
• The premium of the Insurance Policy.
The cost of the Insurance Policy is in Generally 0.1% of total
Insured Amount, but can be increased according the level of the Project Risks. (We should aware of that insurer quoted their price by indicating the percentage for each million i.e. as 1.0%o). You have to aware that while the insurance deductible are low, the premium of insurance is getting high.
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PROJECT INSURANCES • IMPORTANT POINTS TO BE CONSIDERED WHILE SECURING CAR/EAR Policy. • In General Insurance shall issue to Project Period and for 2 years Maintenance Period. Hence we have to secure the Insurance with extending coverage for 5 years as here in Kuwait MPW contracts having 5 years maintenance period
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PROJECT INSURANCES • IMPORTANT POINTS TO BE CONSIDERED WHILE SECURING CAR/EAR Policy. • To whose name the insurance to be issued. Normally insurance shall be in the name of Client, Consultant, Contractor and Subcontractors name.
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PROJECT INSURANCES • TPL- Third Party Liability Insurance • This insurance issue under the CAR policy as a part ll. The required limitation of TPL is mentioning in the Particular Conditions. This insurance cover the damages of the Third Party, either body injury or property damage. Third party means parties who are not included in the Main Contract, such as Client, Consultant, Contractor , Subs, etc.
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PROJECT INSURANCES • WC- Workman Compensation Insurance • This insurance issue to coverer the Workmanship and staff of the Project . This insurance also mandatory requirement as per the Contract Conditions.
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PROJECT INSURANCES • PI- Professional Indemnity Insurance • This insurance is specially secured for the Design Build Projects. The damages occurred due to professional negligence is covered by this policy. Generally this insurance can be obtained by the design firms, consulting firms as such professional services only. In design build projects , the design failures risk will cover only this policy.
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PROJECT INSURANCES • HOPE ALL YOU GOT FRAME IDEA OF PROJECT INSURANCES