Schedule Part

Comment

15

Insurance Requirements

15

Sections 1 and 2

Authorities should seek independent advice on the scope and terms of the project insurances.

In relation to Business Interruption cover the Authority should be named as a co-insured party to the extent that it has a demonstrable insurable interest. This will be in connection with any additional cost of working insured against under the terms of the policy, and not with respect to any loss of anticipated revenue.

15

Section 3

The endorsements are recommended drafting. Whilst the parties should endeavour to obtain cover in accordance with these wordings, if these are not in practice available, the parties should obtain the best terms reasonably available in the market at the time.

15

Section 4

This contains provisions to oblige the contractor to take steps to procure the project insurances on terms that represent best value for money to the Authority.

15

Section 5

This is recommended drafting. If agreement to this wording is not in practice achievable, then the parties should agree the best terms reasonably available in the market at the time. The SPV's broker may wish to limit its liability and include additional liability wording in the Broker's Letter of Undertaking. Whilst this is in principle acceptable, the Authority will need to check that (i) the scope of such additional wording is appropriate (e.g. does not extend to a limitation of liability for fraudulent acts), and (ii) the capped amount is set at a sufficiently high level.