There are as many types of insurance cover as there are risks. Essentially when consideration is paid by one party to another on transferring a risk, there is an insurance relationship. Cover can be as diverse as entertainer performance risk to the impact of weather on farm produce. In construction projects, however, there are three main types of cover. These include contract works, public liability and professional indemnity. These are outlined below, with further detail in Appendix D.
• Contract works insurance provides cover for physical loss and damage, including for damage caused by natural perils such as floods or storms, to any of the work under the construction contract, and for materials and equipment that are to be used in the project but stored on or off-site. The period of cover will generally be up to and including the date of practical completion and will extend to include physical loss or damage caused by a defect during any defects liability period.
• Public liability insurance covers the insured's legal liability to third parties for bodily injury or property damage resulting from the negligence of the insured. Legal liability could arise in the case of consultants and Non-Owner Participants if an injury or damage was caused to a third party on a worksite, such as an injury caused by a surveyor's pegs or a Non-Owner Participant's equipment. In the case of Non-Owner Participants, the liability can also arise during the maintenance/defects liability or post-completion construction period of the contract. Liability may also involve operations after construction is completed and be covered by such insurance where this is arranged.
• Third-party professional indemnity insurance is the typical form of cover. This type of insurance cover protects professionals, such as architects, engineers and other consultants for claims against them arising out of the professional services they provide. In basic terms, professional indemnity insurance covers the insured's legal liability for any claim for compensation made against the insured party for breach of professional duty in the conduct of business by the insured, or on their behalf.
Other insurances that typically apply to projects include:
• workers' compensation insurance (both statutory and common law);
• motor vehicle insurance;
• insurance of plant and equipment; and
• overseas and domestic marine transit.