Liga Asuransi – Every construction project is unique and has its own risks, therefore before starting a project it is important for project owners and contractors to consult with an insurance expert or insurance broker. Insurance brokers can provide input and consideration about the risks of each project stage and solutions to overcome them before processing the insurance guarantee.
Insurance broker who are specialists in the construction sector, they are experts in the ins and outs of project risks. Their experience in handling various projects and settling claims has received special appreciation from the construction industry. Insurance brokers have professional degrees as international insurance experts and are registered with the National Professional Certification Agency (BNSP).
Insurance broker skills really help owners and contractors to feel calm and confident to carry out projects. Your input, suggestions and explanations in understanding insurance clauses will produce maximum insurance guarantees.
The insurance broker’s technical and professional expertise in the field of construction risk is very important, because the heads of contractor companies and project implementers may not have adequate knowledge and experience regarding legal issues and claim settlement.
Insurance is essentially source of financing to pay losses when the accident happened.
One solution to overcome the impact of losses that occur on construction projects is to issue construction insurance guarantees Construction/Erection All Risks Insurance and Third Party Liability Insurance (CAR/EAR/TPL).
But to get maximum guarantees, the CAR/EAR/TPL insurance policy must be modified to suit project conditions, by adding or removing several clauses. The correct addition and deletion of clauses can only be obtained with the help of an insurance broker.
This time we will explain the following clauses:
MR115 – Cover for Designer’s Risk
It is agreed and understood that otherwise subject to the terms, exclusions, provisions and conditions contained in the Policy or endorsed thereon and subject to the Insured having paid the agreed extra premium, exclusion c under Special Exclusions to Section l of the Policy shall be deleted and exclusion d replaced by the following wording:
“The cost of replacement, repair or rectification of loss of or damage to items due to defective material and/or workmanship and/or faulty design, but this exclusion shall be limited to the items immediately affected and shall not be deemed to exclude loss of or damage to correctly executed items resulting from an accident due to such defective material and/or workmanship and/or faulty design.“
Exclusion D
Any costs rendered necessary to replace, repair or rectify Property Insured which is defective as a result of any fault, defect, error or omission in design, plan, specification, material or workmanship, but should any part of the Property Insured containing any such defect become lost or damaged, the costs excluded are those which the Insured would have incurred to replace, repair or rectify the original defect if such defect had been discovered immediately before the Occurrence of loss or damage;
FREE TRANSLATION
MR115 – Protection for Designer Risk
It is agreed and understood that if not subject to the terms, exclusions, terms and conditions contained in the Policy or endorsed therein and subject to the Insured having paid the agreed additional premium, exclusion c under Special Exclusions in Part l of the Policy will be removed and exclusion d replaced with the following words: d)
“The cost of replacing, repairing or rectifying loss or damage to goods due to defective materials and/or faulty workmanship and/or design, but this exclusion shall be limited to goods immediately affected and shall not be deemed to exclude loss or damage to properly executed goods as a result of accident due to defective materials and/or faulty workmanship and/or design. “
ADDITIONAL EXPLANATION
- Design risk is a design that has the potential to fail to meet project requirements.
This includes designs that are flawed, infeasible, inefficient, unstable, or below the client’s standards. Poor design can be manifested as functional defects or obstacles to development that can hinder project development
- In standard insurance policies, including the CEAR/EAR insurance policy, risks arising from design errors are not guaranteed. Because this risk is the responsibility of the designer or consultant. If they want to protect themselves from claims resulting from their mistakes in carrying out their profession then they should buy Professional Liability Insurance (PI) insurance.
- Professional Indemnity Insurance or professional liability insurance, also called professional indemnity insurance, but more commonly known as errors & omissions Error and Omission (E&O), is a form of liability insurance that helps protect consultants professional and individual service providers and companies from underwriting costs to defend against claims of errors and omissions claims by their clients, and damages awarded in civil suits. Insurance coverage focuses on financial losses caused by, and errors or omissions in, the services or products sold by the policyholder. Professional liability insurance takes different forms and names depending on the profession, medical and legal, and is sometimes required by contract.
- PI insurance coverage also covers legal aid and defense costs, including in the event of unfounded legal action. Guarantees do not include criminal prosecution, or various types of potential liability under civil law not mentioned in the insurance policy.
- Defect material is the wrong material chosen at the start of a project and used inappropriately. Damaged materials can cause catastrophic failure. When investigating material failures,
What to check to determine whether a material is damaged or not:
- Review preliminary design documents to determine what materials will be used.
- Perform tests on materials to determine their chemical and mechanical properties if necessary.
- Review procurement specifications to ensure the correct materials are ordered.
- Review the paperwork sent with the purchased materials to see if the correct materials were sent. Even if it appears that the materials shipped are correct, they should be checked as discussed above to determine whether the materials used differ from the shipping documents.
- Review how materials are used in the design. Is there a better material that is more corrosion resistant?
- Carrying out macroscopic and microscopic examinations of metal surfaces. Does the grain structure look correct? Does the structure look as it should?
- One area of concern in the construction sector is bad workmanship or poor workmanship. Craftsmanship is the skill and quality of creating a product or completing a project. Deliverables are about quality; good or bad. If workers are careless or don’t follow proper protocols, it will result in a product that is low quality and not what you expected.
- Building structure failure can be caused by careless workmanship and lack of control over project implementation. The construction industry, and professionals at every level, are responsible for meeting standards of quality, care and craftsmanship.
- The definition of a defective design in legal terms, is a defect or obvious imperfections such that the machine, product, or written document cannot be used safely. The product cannot be used for its intended purpose or may even be dangerous if used.
SPECIAL NOTE
Addition MR115 – Cover for Designer’s Risk in a CAR/EAR insurance policy really helps expand coverage. In a standard policy, any damage and loss that occurs as a result of design errors is not covered. With the expansion of this guarantee, some of these risks can be guaranteed. Provided that the damage and loss that occurs is a direct result of design errors, defective items or poor work practices. But if the result of the error is no physical damage or loss then it cannot be claimed. For example, in the design it is stated that the door is to face west but in practice the door faces south. Errors like this cannot be claimed because there is no direct physical damage or loss. But if the result of the error causes damage, the damage can be claimed by insurance.
Hopefully this short article can be useful for you. Once again, to get insurance coverage for your project, always use the services of an insurance broker. Get in touch insurance broker your mainstay right now.
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