JCT D&B 24 introduces some subtle changes to the insurance provisions in the 2016 contract:
Firstly, the obligation on the contractor to maintain professional indemnity insurance is now subject to cover being available not only on reasonable rates, but on reasonable terms. We think this reflects what has become a market standard position.
Secondly, the contract particulars have been amended to include a placeholder for any insurance sub limits – which we have all seen become more prevalent in recent years with changes to Building Regulations. It may seem to be a straightforward detail to include, but there may be unexpected consequences: if in subsequent years the cover (including the sub-limits) is no longer available on ‘commercially reasonable rates and terms’, then cl 6.16 of the contract will bite, and this means the contractor must notify the employer so they can discuss the best means of protecting their interests. However, conversely, if the market softens and the sub-limits cease to apply, the employer is not entitled to the benefit of this.
Lastly, turning to Contractor' All Risk Insurance, where Option A applies (Option A is where the contractor is to procure all risks insurance in joint names insurance) a new clause has been added, which expressly states that any reinstatement work (i.e. works to reinstate the project following damage and a claim on the contractor’s insurance) will be treated as a “Change”. This gives the contractor the ability to claim a Relevant Event, and therefore an extension of time. The entitlement to additional payment for reinstatement work is unchanged, and remains limited to amounts received under the insurance policy.
Previously reinstatement work was only expressly stated to be a Change under Options B and C, or where loss and damage was caused by an Excepted Risk (this has not changed). Excepted Risks are radiation, pressure waves and terrorism not covered by insurance.
We view this amendment as a clarification of the position on risk for time, where Option A is used i.e. a clarification to remove any scope for argument that the contractor has accepted the risk on time for reinstatement work by using Option A.
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