No matter whether you are a principal, contractor, sub-contractor, consultant or supplier to the construction industry and no matter how well you can document your relationships so as to minimise commercial risk, whether by exclusions, indemnities, directors' guarantees, parent companies guarantees or bank guarantees, the final safeguard is insurance.
Rule number one is that if insurance is required, stop at nothing to ensure that it is in place.
If you are a principal and it is the contractor's duty to insure, do not rely on that duty alone. See the insurance. To do this, make sure you have a provision in your contract requiring provision of certificates of currency prior to the commencement of the work, on the signing of the contract preferably. Follow it up with a provision whereby the builder is not entitled to payment of its first progress claim until evidence of insurance is in place. Follow that up with a provision that certificates of currency must be provided throughout the project on demand. This way, you can always be satisfied that insurance is in place.
Better still, contact the builders brokers direct. Obtain from them an unequivocal statement that the contract insurance is in place. You may be able to rely upon that.
These comments are relevant to all types of insurance: contract works insurance (insurance of the works themselves, equivalent to building insurance for a completed building), public liability insurance (to cover injury to the public both on and off the site), professional indemnity insurance (for where there is design work involved), and statutory workers' compensation insurance (for which it is an offense not to have).
It is just too late if a catastrophe destroys a near-completed building and your builder, who was required to insure, has not done so. Rarely is a builder worth the sort of money required to replace a building under construction.
This is a very brief introduction to this aspect of the law and is not intended to be legal advice. This publication cannot be relied on as a substitute for appropriate legal advice suited to your circumstances. Given that this is the case, you should seek and retain the advice of a solicitor if you require a comprehensive and up to date analysis of the law pertaining to your circumstances
March, 2001
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