65.3  Consequences

(a)  If the requirements of clause 65.2 (Risks Become Uninsurable) are satisfied, but the parties cannot agree as to how to manage or share the risk, then:

(i)  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 set out in clause 52 (Compensation on Termination for Force Majeure) and this Agreement will terminate or elect to allow this Agreement to continue and clause 65.3.1(b) (Consequences) below shall thereafter apply in respect of such risk; and

(ii)  in respect of such construction all risks, material damage, third party liability (if relevant) business interruption (but not loss of profits) or delay in start up (but excluding loss of profits) or statutory insurances this 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 this Agreement will continue, or an amount equal to the amount set out in clause 51.1 (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 to the Contractor whereupon this Agreement will terminate.

(iii)  Where pursuant to clause 65.3.1(a) and/or 65.3.1(b) (Consequences) this Agreement continues then the Unitary Charge shall be reduced in each Contract 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 Contract Year prior to it becoming Uninsurable (Indexed).  Where the risk is Uninsurable for part of a Contract Year only the reduction in the Unitary Charge shall be pro rated to the number of months for which the risk was Uninsurable.

(iv)  Where pursuant to clauses 65.3.1(a) and/or 65.3.1(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 and procure the taking out and maintenance of insurance (to be incepted as soon as reasonably practicable) for such risk in accordance with this Agreement.208

(b)  If, pursuant to clause 65.3.1(b) (Consequences), the Authority elects to make payment to the Contractor (such that the Agreement will terminate) (the Relevant Payment) the Contractor shall have the option (exercisable within twenty (20) Business Days of the date of such election by the Authority (the Option Period)) to pay to the Authority on or before the end of the Option Period, an amount equal to the insurance proceeds that would have been payable had the risk not become Uninsurable, in which case this Agreement will continue (and the Relevant Payment will not be made by the Authority), and the Contractor's payment shall be applied for the same purpose and in the same manner as insurance proceeds would have been applied had the relevant risk not become Uninsurable.

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208  Additional sub-clauses 65.3.1(e) and 65.3.1(f) (Consequences) 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 65.2.1 (Risks Become Uninsurable) that a TPL Risk has become Uninsurable and the Authority's notification to the Contractor in accordance with clause 65.3.1(a) (Consequences) in respect of such risk, then provided it is ultimately agreed or determined that the requirements of clause 65.3.1(b) (Consequences) are satisfied in respect of the Uninsurable TPL Risk and subject to clause 65.3.1(d) (Consequences), clause 65.3.1(b) (Consequences) 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 65.3.1(e) (Consequences) 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 65.2.2 (Risks Become Uninsurable) 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'