Insurances, Bonds and Warranties

Insurances, Bonds and Warranties KCTang Tue, 05/04/2022 - 18:59

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Contents

Note

  • 5 Apr 2022: Punctuations added.
  • 2 Feb 2021: Typo correction.
  • 24 Dec 2014: Moved from wiki.

Generally

  1. Insurer.
  2. Agent.
  3. Broker.
  4. Insured.
  5. Joint names.
  6. Third parties.
  7. Cross liability.
  8. Waiver of subrogation.
  9. Excess / deductible.
  10. Surety / bondsman.
  11. Guarantor.
  12. Beneficiary.

Insurances

  1. Contractors' all risks and third party liability insurances:
    • Materials damage
    • Third party liability.
  2. Insurances of construction plant, temporary buildings and vehicles.
  3. Insurances prior to delivery to site.
  4. Employees' compensation insurances.
  5. Exclusion of self-employed persons and sole proprietors.
  6. Professional liability insurances.

Contractor Controlled Insurance Programme (CCIP)

  1. Insurance procured by the Contractor.
  2. This is the usual approach.
  3. Contractor taking up the administrative role of procuring the insurance.
  4. Contractor may have an established department or experienced staff to do it.
  5. Contractor may have long established insurance agents or brokers to do it.
  6. Contractor in the best position to manage his own site safety / risks.
  7. Contractor's good track records may lead to lower insurance premium.
  8. The lower insurance premium would be reflected in the Contractor's tender price.
  9. A desire to keep the premium low for the future would encourage keeping good track records for now.

Owner Controlled Insurance Programme (OCIP)

  1. Insurance procured by the Owner (Employer).
  2. Mainly for mega projects involving a number of contracts interfacing with one another.
  3. Best to avoid overlaps and gaps, split of responsibilities and mutual claims within the same mega project.
  4. Also suitable when the Employer will have a number of projects coming up over the years.
  5. Employer in better control in areas such as premium, insurance security and insurance coverage.
  6. The limit and scope of indemnity may be higher and bigger than those could be procured by smaller contracts.
  7. Excesses may be too high for smaller contractors within the same mega project.
  8. Employer taking up the administrative role of procuring the insurance.
  9. Employer may not have an established department or experienced staff to do it.
  10. Employer may need to employ insurance consultants to give advice and do it.
  11. It may require a long lead time from deciding to employ the insurance consultant to procurement of insurance.

Bonds

  1. Surety bonds / Performance bonds:
    • Conditional
    • On-demand
    • Validity period.
  2. Tender / bid bonds.
  3. Advance payment bonds.
  4. Retention bonds.
  5. Payment guarantee bonds.

Guarantees

  1. Joint venture guarantees.
  2. Parent company guarantees.

Warranties

  1. Form of Warranty / Collateral Agreement by Nominated Sub-Contractor / Supplier.
  2. Quality warranties:
    • Waterproofing
    • Glass breakage.

(Typo in item 1 corrected, 2 Feb 2021)

 

See also Vetting Insurances, Bonds and Warranties.

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