59.3  Consequences

59.3.1  If the requirements of clause 59.2 (Risks Become Uninsurable) are satisfied, but the Parties cannot agree as to how to manage or share the risk, then:

(a)  in respect of such third party liability insurance only the Authority shall (at the Authority's option) either pay to the Contractor an amount equal to the amount calculated in accordance with clause 42 (Compensation on Termination for Force Majeure) and the Agreement will terminate, or elect to allow the Agreement to continue and clause 59.3.1(b) (Consequences) below shall thereafter apply in respect of such risk; and

(b)  in respect of such [contractors' 'all risks' insurance, property damage insurance, third party liability insurance (if the Authority elects to allow the Agreement to continue in accordance with clause 59.3.1(a) (Consequences), delay in start up and business interruption insurance (but not loss of profits) or statutory insurances] the Agreement shall continue and on the occurrence of the risk (but only for as long as such risk remains Uninsurable) the Authority shall (at the Authority's option) either pay to the Contractor an amount equal to insurance proceeds that would have been payable had the relevant insurance continued to be available and the Agreement will continue, or an amount equal to the amount calculated in accordance with clause 42 (Compensation on Termination for Force Majeure) plus (in relation to third party liability insurance only) the amount of insurance proceeds that would have been payable whereupon the Agreement will terminate; and

(c)  where pursuant to clauses 59.3.1(a) and/or 59.3.1(b) (Consequences) this Agreement continues then the Unitary Charge shall be reduced in each year for which the relevant insurance is not maintained by an amount equal to the premium paid (or which would have been paid) by the Contractor in respect of the relevant risk in the year prior to it becoming Uninsurable (Indexed from the date that the risk becomes Uninsurable).  Where the risk is Uninsurable for part of a year only the reduction in the Unitary Charge shall be pro rated to the number of months for which the risk is Uninsurable; and

(d)  where pursuant to clauses 59.3.1(a) and/or 59.3.1(b) (Consequences) this Agreement continues the Contractor shall approach the insurance market at least every four months to establish whether the risk remains Uninsurable.  As soon as the Contractor is aware that the risk is no longer Uninsurable, the Contractor shall take out and maintain or procure the taking out and maintenance of insurance (to be incepted as soon as is reasonably practicable) for such risk in accordance with this Agreement294.

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294  Additional sub-clauses 59.3.1(e) and 59.3.1(f) may be added at the Authority's discretion as follows:

(e) In respect of any period between the Authority receiving notification in accordance with clause 59.2.1 that a TPL Risk has become Uninsurable and the Authority's notification to the Contractor in accordance with clause 59.3.1(a) in respect of such risk, then provided it is ultimately agreed or determined that the requirements of clause 59.3.1 (b) are satisfied in respect of the Uninsurable TPL Risk and subject to clause 59.3.1(d) below, clause 59.3.1(b) shall apply in respect of occurrences of the Uninsurable TPL Risk during such period unless the parties otherwise agree how to manage the risk during the period; and

(f) clause 59.3.1(e) shall only apply provided the Contractor does not unreasonably materially delay (a) agreement and/or determination in accordance with the Dispute Resolution Procedure as to whether the requirements of clause 59.2.2 are satisfied in respect of the Uninsurable TPL Risk and/or (b) meeting with the Authority to discuss the means by which the risk should be managed.

TPL Risk should be defined as 'a risk which is required to be insured under the third party liability insurance policy'