Content Headings

Key Issues

Example clauses

Notes and References

Insurance

The Authority should specify in detail the key insurances Concessionaire is required to procure. These requirements should be outlined in full in a Schedule.  The Authority should be aware that in relation to insurances listed in the Schedule that they may also become insurers of last resort.  The following is Insurances to be specified:

•  Construction all risks;

•  Delay in start up;

•  Public Liability;

•  Material Damage; and

•  Business Interruption.

Alternative 1

Concessionaire shall, at its own cost, procure that the insurances, details of which are set out in Part [ref] of Schedule [Insurance Requirements], are taken out prior to the commencement of the Works and are maintained for the periods specified in Part [ref] of Schedule [Insurance Requirements].

Concessionaire shall, at its own cost, procure that the insurances, details of which are set out in Part [ref] of Schedule [Insurance Requirements], are taken out prior to the Actual Completion Date and are maintained for the periods specified in Part [ref] of Schedule [Insurance Requirements].

Without prejudice to the other provisions of this Clause, Concessionaire shall, at all relevant times, at its own cost, effect and maintain in full force those insurances which it is required to effect by any applicable Law.

See SOPC Section 24.

Alternative 1 adapted from Department of Health (UK), Standard Form Project Agreement Index reference A1 Folder 1.

Alternative 2

Implementation Period 

The Concessionaire shall at its cost and expense, purchase and maintain by due re-instatement or otherwise, during the Implementation Period such insurance as is necessary in accordance with Financing Documents, Good Industry Practice and Applicable Laws, including but not limited to the following:

(a)  contractors' all risk insurance; 

(b)  riot, strike, civil commotion and terrorism insurance cover equivalent to one sixth (1/6th) of the Initial Investment; 

(c)  comprehensive third party liability insurance including injury or death to personnel / representatives of Persons who may enter the Project Site;

(d)  workmen's compensation insurance; 

(e)  any other insurance that may be necessary to protect the Concessionaire, its employees and its assets against loss, damage, destruction, business interruption or loss of profit including insurance against all Force Majeure Events that are insurable. 

Operations Period

The Concessionaire shall at its cost and expense, purchase and maintain by re-instatement or otherwise, during the Operations Period, such insurance as is necessary in accordance with Financing Documents, Good Industry Practice and Applicable Laws, including but not limited to the following: 

(a)  loss, damage or destruction of the Project Facility, at replacement value, 

(b)  riot, strike, civil commotion and terrorism insurance cover equivalent to one sixth (1/6th) of the Initial Investment; 

(c)  the Concessionaire's general liability arising out of the Concession, 

(d)  liability to third parties; 

(e)  any other insurance that may be necessary to protect the Concessionaire, its employees and its assets against loss, damage, destruction, business interruption or loss of profit including insurance against all Force Majeure Events that are insurable. 

Evidence of Insurance

The Concessionaire shall, from time to time, provide to the Authority copies of all insurance policies (or appropriate endorsements, certifications or other satisfactory evidence of insurance) obtained by the Concessionaire in accordance with this Agreement. 

Validity of Insurance

The Concessionaire shall from time to time promptly pay insurance premium, keep the insurance policies in force and valid throughout the Concession Period and furnish copies thereof to the Authority. Each insurance policy shall provide that the same shall not be cancelled or terminated unless 10 Days' clear notice of cancellation is provided to the Authority in writing. If at any time the Concessionaire fails to obtain or maintain in full force and effect any and all of the insurance required under this Agreement, the Authority may without prejudice to its other rights and remedies for breach, at its option obtain and maintain such insurance and all sums incurred by the Authority therefore shall be reimbursed by the Concessionaire to the Authority within 7 days from the receipt of claim in respect thereof made by the Authority. 

The Concessionaire shall inform the Authority in good time of any material variation of insurance policies specified herein before taking out such insurances. 

Application of Insurance Proceeds

Subject to the provisions of the Financing Documents and unless otherwise provided herein, the proceeds of all insurance policies received shall be promptly applied by the Concessionaire towards repair, renovation, restoration or re-instatement of the Project Facility or any part thereof which may have been damaged or destroyed. The Concessionaire may designate the Lenders as the loss payees under the insurance policies or assign the insurance policies in their favour as security for the financial assistance provided by them to the Project. The Concessionaire shall carry out such repair, renovation, restoration or re-instatement to the extent possible in such manner that the Project Facility after such repair, renovation, restoration or re-instatement be as far as possible in the same condition as it were prior to such damage or destruction, normal wear and tear excepted. 

Un-insurable Risks 

If during the Concession Period, any risk which has been previously insured becomes un-insurable due to the fact that the insurers have ceased to insure such a risk and therefore insurance cannot be maintained/re-instated in respect of such risk, the Concessionaire shall not be deemed to be in breach of its obligations regarding insurance under this Agreement.

Alternative 2 adapted from Concession Agreement for Colombo Kathunayake Expressway Project (note confidential), index reference A2, folder 1.