Vetting Insurances, Bonds and Warranties

Vetting Insurances, Bonds and Warranties KCTang Tue, 05/04/2022 - 18:02

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Note

  • 5 Apr 2022: Split from Post Contract.
  • 3 Apr 2020: Created.

Generally

  1. See Insurances, Bonds and Warranties.

Vet insurances, bonds and warranties

  1. QS vets draft insurances and bonds submitted by the Contractors and Nominated Sub-Contractors and Suppliers to ensure that the terms and conditions are in compliance with the contract requirements.
  2. Usual types:
    • Contractors' all risks and third party liability insurances – required to be submitted before any work on site
    • Employees’ Compensation Insurance – required to be submitted before any work on site
    • Surety bond – usually required before the first payment otherwise cash security of equal amount will be retained
    • Materials and workmanship warranty (roofing, kitchen and bathroom waterproofing layers, windows, curtain wall) – usually towards Substantial / Practical Completion.
  3. Form of Warranty related to Nominated Sub-Contractors and Suppliers should have been dealt with not later than the award of the contracts.
  4. Usual problems encountered:
    • Drafts not exactly following the pro-forma given in the Tender Documents (pro-forma usually given for bonds and warranties)
    • Drafts not complying with contract requirements
    • Incorrect date of the letter of acceptance or letter of intent inserted (used when Contract Documents may not have been signed at that time)
    • Incorrect names and addresses of Project, Employer and Contractor inserted
    • Incorrect descriptions of parties to be included as the joint-insured
    • Incorrect descriptions to cover all tiers of sub-contractors
    • Amounts of excesses too high
    • Period of insurance (construction and defects liability / maintenance) not sufficient
    • Fixed expiry date in the form of calendar date instead of a floating expiry date pegged to the Substantial Completion Date or Date of Defects Rectification Certificate / Certificate of Completion of Making Good Defects.
    • Late submission of drafts with protracted rounds of comments and re-submissions
    • Late submission of formally executed documents.

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