ABSTRACT
A list of the insurance policies required by each member of the construction trinity, owner/ employer, professional and contractor is shown in Figure 6.2 on page 197. Most of these policies are in fact required to be issued under the terms of the two standard forms of contract normally agreed between the owner/employer and the design professional on the one hand and between the owner/employer and the contractor on the other. In the international field, the standard form of contract normally agreed between the owner/employer and the design professional is FIDIC’s White Book.1 It requires no provision of insurance other than professional indemnity insurance with compatible public liability insurance cover, as discussed in Chapter 13 below. The contract normally agreed between the owner/employer and the contractor in the international field is one of a number of standard forms issued by FIDIC, which are referred to usually by the colour of their cover: The old Red Book, the old Yellow Book, the Orange Book, the New Red Book, the New Yellow Book, the Silver Book and the Green Book.2 They all require that either the contractor or the employer should obtain the following three insurance covers:
• The old Red Book: Conditions of Contract for Works of Civil Engineering Construction, 4th Edition 1987, Part I-General Conditions with forms of tender and agreement and Part IIConditions of particular application with guidelines for preparation of Part II Clauses, reprinted 1988 with editorial amendments and later reprinted in 1992 with further amendments;
• The Yellow Book: Conditions of Contract for Electrical and Mechanical Works including erection on site with forms of tender and agreement, 3rd edition 1987, Part I-General Conditions and Part II-Special Conditions, reprinted 1988 with editorial amendments;
• The Orange Book: Conditions of Contract for Design-Build and Turnkey, 1st Edition 1995, Part I-General Conditions and Part II-Guidance for the preparation of conditions of particular application, Forms of tender and agreement;
• The new Red Book: Conditions of Contract for Construction, 1st edition 1999 (for Building and Engineering Works, Designed by the Employer, General Conditions,
1 Property insurance (own property) which mainly includes the works to be constructed and other property on the site, see page 245, is covered normally by a Contractors’ All Risks insurance policy (CAR);
2 Liability insurance to protect the owner/employer and the contractor against their legal liability in respect of bodily injury and disease of the contractor’s employees working on the project, and arising as a result of the contractor’s work on the project, is covered normally by the Employer’s Liability insurance policy (EL);
3 Liability insurance to protect the owner/employer and the contractor against their legal liability, other than in item 2 above, within a specified limit of indemnity in respect of bodily injury of third parties (other than the employees) and damage to their property including that belonging to employees, and arising as a result of the contractor’s work on the project, is covered normally by a Public Liability insurance policy (PL).
