Products Contractor’s All Risks (CAR) Contractors’ All Risks (CAR) insurance policies are used to cover all types of building and civil engineering construction projects, such as: • Buildings: Residential (housing), Non-Residential, Industrial, Halls, Stadia, Warehouses, Townhouse Complexes, Shopping Centres, Office Parks, Airports. • Civil Works: Dams, Bridges, Infrastructure, Roads, Railway Lines,. • Structures (Towers, Chimneys, Silos) • Wet works - Breakwaters, Jetties, River Control Works, Canals, Irrigation Systems. • Underground works - Tunnels, Culverts, Bridges, Mines • Pipelines: Water, Sewer, Gas, Fuel. Caveat emptor (buyer beware): Contract Value Sums Insured to allow for Contract Price Adjustments and Variation Orders, etc. Caveat emptor (buyer beware): The correct Contract Period and The Defects Liability Period (Maintenance Period), Also Testing and Commissioning Periods. Caveat emptor (buyer beware): Faulty DESIGN is mostly to be regarded as a principled exclusion. Similarly, Faulty/Defective Workmanship and Materials for off-site manufacture. Erection All Risks (EAR) Erection All Risks (EAR) insurance policies are also used to cover all types of engineering construction projects, where the emphasis is more on Mechanical and/or Electrical plant and machinery installations, such as Manufacturing/Production Plants (cement, soda-ash, oil refineries, sugar/flour mills), Mines, Power Stations, Factories, Assembly Plants, and the like. Note: While general building construction work would include the installation of heating and air conditioning systems and/or say, lifts (elevators) in buildings, since these do not constitute the larger value-portion of the Project a CAR policy remains suitable. For large specialist-type Engineering Projects, example a major new airport terminal development or an Industrial Zone development, consideration should be given to a comprehensive “Engineering Project Insurance Cover” policy Caveat emptor (buyer beware): As per CAR above but more importantly the Hot Testing and Commissioning Periods. Third Party Liability (TPL) This is an Extension to the above CAR/EAR policies. Usually the ‘Works’ cover section is referred to as Section I and the TPL section is deemed to be Section II. It serves to protect the insured against ‘third party’ claims (to Third Party property and/or bodily injury to Third party persons) – of-course arising out of the performance of the contract; from the construction activities. Caveat emptor (buyer beware): Excluded principally, is the cost of making good faulty workmanship materials or design in any part of the Property Insured. Advanced Loss of Profits (ALOP) Note importantly too is the related financial cover: Advanced Loss of Profits (ALOP) Covers the ‘Loss of Profits’ (consequential loss of gross profit, loss of revenue or increased costs of working) as a consequence of the delay in project’s commercial operation all arising from an indemnifiable (payable) loss experienced under the underlying CAR/EAR Policy. The ALOP section is usually deemed to be Section III of the CAR/EAR policy. Contractor's Plant and Machinery Insurance (CPM) aka Plant All Risks Insurance (PAR) An “all risks” cover for unforeseen/fortuitous/accidental physical loss or damage to the large construction Machinery and Equipment (‘high-cost tools of trade) arising from external causes/perils. AND THEFT! Covers loss of or damage to construction plant and machinery from any cause/peril (not excluded) whilst in storage, transit, on a contract site and during operation as a ‘tool of trade’. The policy can be extended to cover the item for operations underground and for Machinery Breakdown. CPM/PAR policies are usually secured on an annual basis so as to cover the plant item for all of its ‘annual’ utilization as required by the Owner. A plant item is usually not only located and utilised at one contract site. CPM/PAR policies can also be secured for hired-in plant by a Contractor – if the hiring-in contract indeed holds the Contractor responsible for the insurance of the hired-in items. Note: should the hired-in Plant item be damaged, the Contractor hiring the item, may still be held liable/responsible for the continuing hire charges. Caveat emptor (buyer beware): Third Party Liability cover is usually not provided as an extension to stand-alone CPM/PAR policies. But, markets providing for such arrangements are available under special circumstances. The Items usually covered under a CPM/PAR policy are: • Earth moving equipment, Excavators, Dumpers, Articulated Dump Trucks, Loaders, Graders, Dozers, Tractor/Loader/Backactors (TLB’s), Compaction/ Vibratory Rollers, Hydraulic/Pneumatic Breakers • Tower and Mobile Cranes, • Drilling Rigs, Tunnel Boring Machinery • Crusher Plant, Concrete Mixing Plant, Asphalt Laying Plant • Compressors, Pumps Machinery Breakdown Insurance (MB) Covers sudden accidental and unforeseen physical loss of or damage to machinery and plant arising from mechanical and/or electrical breakdown whilst in operation. A critical ‘production’ machine could breakdown from a defect in its material make-up, from faulty assembly, faults arising from maintenance and overhaul work at the workshop, etc) Faulty design defects, defects in casting and materials and workmanship, at the manufacturer’s workshop or in erection, are also insured. Even loss or damage arising from negligence, lack of skill, faulty operation, failure of control systems and safety systems, lubrication systems, is covered. Caveat emptor (buyer beware): Excluded are faults or defects existing at the time of commencement of the policy. The cover only incepts after the machine has been fully Tested and Commissioned (via the All Risks cover provided by the CAR and EAR policies). Caveat emptor (buyer beware): Excluded are Wear and tear related to ordinary use or operation as well as erosion, corrosion, etc. Caveat emptor (buyer beware): Excluded are Losses covered by the manufacturer's warranty. Machinery breakdown policies come to the fore for eventualities when faults are discovered after the manufacturer's warranty/guarantee has expired and the Supplier’s/Manufacturer’s responsibility to hold the Purchaser/Owner indemnified has been waived. Machinery Loss of Profits (MLOP) Note importantly too is the related financial cover: Machinery Loss of Profits (MLOP) Covers the ‘Loss of Profits’ (consequential loss of gross profit, loss of revenue or increased costs of working) arising as a consequence of the indemnifiable (payable) loss experienced under the underlying Machinery Breakdown Policy. all types of machinery, plant, mechanical equipment and apparatus may be covered under the machinery breakdown insurance. Electronic Equipment Insurance (EEI) An Electronic Equipment insurance policy offers cover for loss or damage to all types of electronic equipment such as entire Office equipment, audio visual equipment, Information Technology (IT) installations, telephone exchanges, cell phone networks, specialised electronic medical equipment (MRI’s), electronic measuring equipment etc. arising from fire and allied perils viz, accidental damage (breakage), malicious damage and electronic derangement AND THEFT! The policy is of an all risks nature, covering unforeseen accidental loss or damage. The covers include material damage, business interruption, increased cost of working, and reconstitution of data (comprehensive software and software Business Interruption (BI) can be secured via certain specialist markets). Caveat emptor (buyer beware): Similar to MB above, Excluded are Wear and Tear, existing faults, loss/damage to exchangeable parts and consumables. Civil Engineering Completed Risks Covers civil engineering projects against natural hazards after construction is completed. Example: concerns of flood damage to a completed dam or a road over river bridge. Deterioration Of Stock (D.O.S.) A DOS policy is essentially a Machinery Breakdown and ‘Loss of profits’ policy combination where the concern is the deterioration, contamination or putrefaction (rotting) of perishable stock as a result of the unexpected rise in temperature brought about by the accidental failure or breakdown of the refrigeration (cold storage) plant. Even loss arising from Failure of electrical supply can be covered (may be difficult, if not extremely costly in present-day ‘Load-Shedding’ environments). Caveat emptor (buyer beware): The insured is expected to meticulously maintain a daily stock book recording all stock/inventory movements – usually per a format prescribed by the insurer. Performance Bond Guarantee Contractors are usually required to secure a ‘Performance Guarantee’ so as to assure payment to the Client/Employer in the event they cannot fulfil their contractual obligations in terms of the underlying contract. Other forms of guarantees/bonds that can be secured on behalf of a Contractor are: Tender Guarantees (fails to submit or honour his tender) Advance Payment Guarantees (as security to Client/Employer for the advanced payments made to the Contractor) Retention Guarantees (in place of retention money contractuallyheld-over by the Client/Employer as security for any hidden defects inthe completed works which may arise at a later date).