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UNDERWRITING CRITERIA GENERAL INFORMATION - 1

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  1. UNDERWRITING CRITERIAGENERAL INFORMATION - 1 • NAME OF PROPOSER; • RELATIONSHIP OF PROPOSER TO PROJECT; • IS THERE A CONTRACTUAL RESPONSIBILITY TO INCLUDE THE INTERESTS OF OTHER PARTIES? • IF SO, NAME THESE PARTIES (SEE NEXT SLIDE); • LOCATION OF CONTRACT SITE; • DESCRIBE THE CONTRACT SITE TOPOGRAPHY; • RESULTS OF ANY GEOTECHNIC AND HYDROLOGY INVESTIGATIONS CARRIED OUT NAME(S) OF ENGINEERS; • DESCRIPTION OF PROJECT; • COPIES OF PLANS, SPECIFICATIONS AND APPLICABLE CONTRACT DOCUMENT CLAUSES WOULD BE OF PARTICULAR VALUE TO UNDERWRITER; • PARTICULARS OF ANY FREE-ISSUE MATERIALS TO BE PROVIDED TO THE CONTRACTOR AND VALUE THEREOF;

  2. CONSTRUCTION HIERACHY

  3. UNDERWRITING CRITERIAGENERAL INFORMATION - 2 • IS THE PROJECT A TURNKEY PROJECT OR WILL IT BE TAKEN OVER IN SECTIONS WHEN COMPLETE; • WILL THE PROJECT BE GIVEN TO ONE CONTRACTOR OR WILL IT BE FRAGMENTED IN OTHER WORDS WILL SEPARATE CONTRACTS BE AWARDED TO CIVIL, STRUCTURAL, ELECTRICAL AND MECHANICAL CONTRACTORS; • WILL SITE PREPARATION INVOLVE BUILDINGS DEMOLITION • IF SO, PROVIDE PARTICULARS OF WORK ENTAILED, WITH PARTICULAR REFERENCE TO BUILDINGS AND POTENTIALLY HAZARDOUS SUBSTANCES THAT MAY HAVE BEEN STORED; • THE OVERALL CONTRACT PERIOD FROM………TO………; • A BAR CHART SHOWING VARIOUS ACTIVITIES WOULD BE BENEFICIAL TO PREMIUM COMPUTATION; • THE FULL CONTRACT VALUE INCLUDING FREE-ISSUE MATERIALS; • THE VALUE OF EACH ENGINEERING DISCIPLINE; • THE SECURITY PRECAUTIONS TO BE UNDERTAKEN TO PREVENT THEFT, MALICIOUS DAMAGE ETC.;

  4. UNDERWRITING CRITERIA CIVIL WORKS – 1 • THE VALUE OF CIVIL WORKS; • ANY SPECIAL PRECAUTIONS TO BE TAKEN IN VIEW OF GEOTECHNIC OR HYDROLOGY FINDINGS; • DESCRIBE THE FOUNDATIONS ESPECIALLY WHETHER THEY INCLUDE PILES AND THEIR TYPE STRIP, RAFT ETC.; • IS THE POLICY TO PROVIDE FOR PILING, IF SO TYPE OF PILES ENVISAGED AND EXPECTED DEPTH OF PILES; • NAME OF PILING CONTRACTOR; • PROVIDE THE DEPTH OF EXCAVATIONS; • TO WHAT EXTENT WILL THERE BE REMOVAL OF SUPPORT (LATERAL AND/OR OTHERWISE) TO ADJACENT PROPERTY OR BUILDINGS; • IF TEMPORARY AND PERMANENT SUPPORT TO BE INSTALLED WHO WILL UNDERTAKE THIS WORK; • NAME THE SUPPORT CONTRACTOR; • WILL THERE BE ANY ON-SITE MANUFACTURE OR CASTING OF PRESTRESSED COMPONENTS;

  5. UNDERWRITING CRITERIA CIVIL WORKS – 2 • PROXIMITY OF SITE TO SEA OR INLAND WATERWAYS; • IF A RIVER OR DAM PROVIDE THE 50 YEAR FLOOD HISTORY, IS THERE A POSSIBILITY OF THE SITE BEING FLOODED FROM THIS WATER SOURCE; • DESCRIBE THE PRECAUTIONS TO PREVENT FLOODING; • DEPENDING ON HYDROLOGY REPORT, WHAT PRECAUTIONS ARE TO BE TAKEN TO HANDLE THE INGRESS OF WATER, FROM AN UNDERGROUND SOURCE; • ALSO, GIVE DETAILS OF STANDBY PUMPING ARRANGEMENTS;

  6. UNDERWRITING CRITERIA CIVIL WORKS – 3 • IF THE CIVIL WORKS COMPRISES SHAFT SINKING TUNNELLING OR OTHER UNDERGROUND WORK THEN DESCRIBE: • THE DIAMETER OF THE SHAFT OR TUNNELL, • THE PROPOSED DEPTH OF THE SHAFT OR LENGTH OF THE TUNNELL AND WHETHER THE SHAFT OR TUNNELL WILL BE LINED, • THE PRE-EXCAVATION GROUND INTEGRITY INVESTIGATIONS, A COPY OF THE REPORT WOULD BE NECESSARY PLUS THE ENGINEER’S RECOMMENDATIONS, • PARTICULARS OF THE METHOD OF PROBING AHEAD OF THE WORKING FACE DURING EXCAVATION IS A MUST; • FOR ANY RAISEBORING OR TUNNELL BORING WORK THE DIAMETER OF THE RAISEBORE HEAD OR TUNNELL BORING HEAD MUST BE GIVEN PLUS DETAILS AS REQUIRED IN THE SECOND THIRD AND FOURTH PARAMETER ABOVE.

  7. PROBING AHEAD OF THE WORKING FACE • THIS TYPE OF RADIAL DRILLING AHEAD OF THE WORKING FACE IS TO IDENTIFY THE NATURE OF THE GROUND CONDITIONS AND THE PRESENCE OF WATER • TO BE EXPECTED AS THE TUNNEL OR SHAFT CONTINUES • SIDE ELEVATION END ELEVATION DRILLING OUTWARDS 30 TO 45 DEGREES FROM THE STRAIGHT LINE

  8. UNDERWRITING CRITERIA STRUCTURAL WORKS • THE STRUCTURE TO BE DESCRIBED FULLY GIVING : • THE TYPE OF THE STRUCTURE IE. FACTORY, WAREHOUSE, OFFICE BLOCK, HOSPITAL OR TENEMENT BUILDING ETC., • THE NATURE OF THE STRUCTURE WHETHER IT IS OF CONCRETE, WITH BRICK INFILLS OR A BASIC STEEL STRUCTURE WITH CONCRETE LANDINGS WITH BRICK INFILL ETC., • THE NUMBER OF BASEMENTS, • DETAILS OF ANY PROTOTYPE OR UNTRIED FEATURES EMBODIED IN THE DESIGN OF THE STRUCTURE, WHETHER STRUCTURAL OR CONSTRUCTION METHOD. IS THE SELECTED CONTRACTOR FAMILIAR WITH THIS METHODOGY, • THE NUMBER OF FLOORS, • THE TYPE OF FINISHES, • DETAILS WHEN ELECTRICALS AND MECHANICALS WILL BE INSTALLED; • DESCRIBE THE MEASURES TO PREVENT THE STRUCTURE FROM FLOODING AND WHAT PUMPING ARRANGEMENTS WILL BE PRESENT TO HANDLE THE INGRESS OF WATER.

  9. UNDERWRITING CRITERIA ELECTRICAL & MECHANICAL WORKS • DESCRIBE THE ELECTRICALS AND MECHANICALS TO BE INCORPORATED INTO THE WORKS IE BOILERS, POWER SUPPLY TRANSFORMERS AND SWITCHGEAR, AIR CONDITIONING AND/OR MANUFACTURING MACHINERY EG TO MANUFACTURE WIDGETS; • WHETHER THERE ARE ANY UNTRIED FEATURES OR PROTOTYPES OR WHETHER THE MACHINERY IS STANDARD OF THE SAME TYPE AND SIZE CURRENTLY OPERATING IN MANY FACTORIES; • GIVE PARTICULARS OF THE INSTALLATION PROCESS AND TESTING METHODS; • WILL PARTS OF THE MACHINERY BE TAKEN INTO OPERATION BEFORE THE PLANT AS A WHOLE IS COMMISSIONED, IN OTHER WORDS WILL THERE BE BENEFICIAL USE BEFORE TAKE-OVER, IF SO, MUST INSURANCE CONTINUE AFTER BEING TAKEN INTO USE? IS COVER TO INCLUDE ELECTRICAL AND MECHANICAL BREAKDOWN? • IS THE FEEDSTOCK INFLAMABLE OR IS THERE AN EXPLOSION HAZARD • DESCRIBE THE TESTING PROCEDURE PARTICULARLY THE RUNNING TEST AND SAFETY PRECAUTIONS DURING TESTING

  10. WHAT DETERMINES A PROTOTYPEOR UNTRIED FEATURE • The cylinder on the left is the standard cylinder that has been manufactured for many years and has stood the test of time. All that has been done to manufacture the cylinder on the right is to increase size, otherwise, everything else is the same, thus it is a prototype with untried features. Accordingly, the stresses and strains will be multiples of the original. • In other words a failure waiting to happen.

  11. UNDERWRITING CRITERIAMAINTENANCE PERIOD • GIVE DETAILS OF THE MAINTENANCE REQUIREMENTS OF THE CONTRACT, DOES THE CONTRACT CALL FOR • MAINTENANCE VISITS ONLY, • LIMITED MAINTENANCE PROVIDING FOR DAMAGE CONSEQUENT ON PRIOR DEFECTS OF MATERIALS, WORKMANSHIP, DESIGN PLAN OR SPECIFICATION OCCURRING DURING CONSTRUCTION AT THE CONTRACT SITE, • WIDER FORM OF MAINTENANCE ALLOWING FOR DAMAGE RESULTING FROM ALL PRIOR DEFECTS OF MATERIALS, WORKMANSHIP, DESIGN PLAN OR SPECIFICATION; • DOES THE CONTRACT ALLOW FOR SUBROGATION RIGHTS IN THE EVENT OF DEFECTIVE MATERIALS, DESIGN, PLAN OR SPECIFICATION OR OFF-SITE WORKMANSHIP.

  12. GENERAL CONSIDERATIONSTHIRD PARTY LIABILITY - 1 • LIMIT OF INDEMNITY (INCLUSIVE OR EXCLUSIVE OF EXTENSIONS – R00,000,000; • PROPERTY DAMAGE EXCESS • RISK LOCATION RELATIVE TO: • ADJACENT PROPERTIES • EXISTING PUBLIC SERVICES OF WATER, SEWERAGE, ELECTRICITY OVERHEAD LINES OR UNDERGROUND CABLES • EXISTING PROPERTY ADJACENT TO CONTRACT WORKS SITE • IS THERE TO BE ANY BLASTING, IF SO, GIVE DETAILS • DEPTH OF EXCAVATION • WILL THE EXCAVATION AFFECT THE SUPPORT OF ADJACENT THIRD PARTY BUILDINGS • EXPERTISE OF DESIGN ENGINEER AND CONTRACTOR • ARE THE WORKING METHODS STANDARD AND WILL THERE BE ANY METHODS OF WORK UNFAMILIAR TO THE CONTRACTOR

  13. GENERAL CONSIDERATIONSPUBLIC LIABILITY - 2 • ONE MUST THEN CONSIDER THE NECESSITY TO INCLUDE ANY OR ALL OF THE FOLLOWING EXTENSIONS OF COVER: • ARREST, ASSAULT, DISCHARGE AND DEFAMATION • EMERGENCY MEDICAL EXPENSES • PREVENTION OF ACCESS • LEGAL DEFENCE COSTS • TRESSPASS OR NUISANCE; • REMOVAL OF SUPPORT (LATERAL OR VERTICAL) COULD BE AN EXTENSION, HOWEVER THE TERMS OF THIS COVER DIFFERS CONSIDERABLY FROM THE BASIC COVER, THUS IT IS DESIREABLE TO ISSUE A SEPARATE SECTION OR POLICY. THIS COVER WILL BE DISCUSSED SEPERATELY.

  14. PREMIUM COMPUTATIONCONTRACT WORKS – GENERAL - 1 • UNDERWRITING IS A SCIENCE AND NOT MERELY A RULE OF THUMB; • THE UNDERWRITER WHO RELIES ON GUESSWORK MAY BE LUCKY FOR A PERIOD BUT WILL SOON COME SHORT; • ONE CANNOT ASSUME THAT A SINGLE RATE WOULD APPLY TO ALL AND ANY PROJECT, NO MATTER HOW SLIGHT, THERE ARE ALWAYS DIFFERENCES WHICH COULD MAKE A VAST DIFFERENCE TO THE RATE CHARGED; • ACCORDINGLY EACH RISK MUST BE UNDERWRITTEN ON ITS OWN MERITS AND PECULIARITIES WITH EACH ASPECT BEING GIVEN INDIVIDUAL CONSIDERATION; • WE THEN CALCULATE INDIVIDUAL RATES FOR THE CIVIL, STRUCTURAL,ELECTRICAL & MECHANICAL AND LIABILITY RISKS; • NO, I AM NOT GOING TO GIVE YOU BASIS RATES, BUT I WILL SUGGEST METHODS OF CALCULATION. THE BASIS RATES ARE FOR EACH UNDERWRITING HOUSE TO DETERMINE THEMSELVES.

  15. PREMIUM COMPUTATIONCONTRACT WORKS – GENERAL - 2 • IT MUST BE APPRECIATED THAT PERILS OF THE ENVIRONMENT HAVE A DIFFERENT IMPACT ON EACH OF THE CONSTRUCTION DISCIPLINES; • FOR EXAMPLE, EXCESSIVE RAINFALL MAY NOT BE AS CRITICAL TO A PARTLY CONSTRUCTED STRUCTURE AS IT WOULD TO FOUNDATION EXCAVATIONS, ON THE OTHER HAND WIND MAY NOT CAUSE MUCH DAMAGE TO AN EXCAVATION AS IT WOULD TO A STRUCTURE NOT ENTIRELY BRACED OR STEEL BEING LIFTED INTO POSITION A FURTHER PROBLEM WOULD BE WHEN A STRUCTURE IS NOT FULLY CLAD THUS CAUSING A WIND TUNNELL WITHOUT ANY EXIT; • FIRE IS A HAZARD MORE SERIOUS WHERE THE BUILDING IS NEARING COMPLETION OR WHERE MACHINERY HAS BEEN INSTALLED OFTEN PACKING MATERIALS ARE NOT REMOVED FROM SITE. FIRE IS NOT THAT SERIOUS WHEN RELATED TO EXCAVATIONS OR FOUNDATIONS ONE COULD EXPECT MINIMAL DAMAGE;

  16. PREMIUM COMPUTATION CONTRACT WORKS – CIVIL WORKS 1 • It is usual for there to be a specific rate % for each project type e.g.. ROADS, RAILWAY SYSTEMS, DAMS, SHAFT SINKING, AIRPORT RUNWAYS/APRONS, TUNNELLING AND THE LIKE; • THE APPLICABLE RATE X (SAY 2.5%) MUST THEN BE APPORTIONED TO RISK CATEGORIES, FOR EXAMPLE, (THESE % ARE JUST AN ILLUSTRATION AND ARE NOT REALISTIC) STORM/WIND 45% FIRE/LIGHTNING/EXPLOSION 5% COLLAPSE/LANDSLIDE 40% THEFT/MALICIOUS DAMAGE 10%; • NEXT ONE MUST DECIDE ON THE EXTENT OF THE RISK APPLICABLE TO EACH CATEGORY, THUS STORM AND WIND ARE 45% OF 2.5%= 1.125% BUT THE WORK IS BEING UNDERTAKEN DURING THE DRY SEASON THEREFORE THIS RISK IS REGARDED AS MINIMAL SAY 25% OF THE NORM, OUR RATE FOR THIS PORTION IS THUS 25% 1.125% = 0.281%; • THE SAME CALCULATION IS CARRIED OUT FOR EACH OF THE OTHER CATEGORIES OF THE RATE X;

  17. PREMIUM COMPUTATION CONTRACT WORKS – CIVIL WORKS 2 • THE NEXT PART OF THE CALCULATION IS TO TAKE INTO ACCOUNT THE PERIOD ON RISK, THIS MAY NOT ONLY BE THE CONSTRUCTION PERIOD, BUT THE RISK MAY CONTINUE UNTIL TAKE-OVER OF THE COMPLETED PROJECT AS IN THE CASE OF A TURNKEY PROJECT; • IT MUST BE REMEMBERED THAT IF TAKE-OVER IS TO BE DELAYED UNTIL FINAL COMPLETION, THEN THE CIVIL RISK WILL BE EXPOSED FOR A PERIOD THAT MUST BE DETERMINED (DURING CONSTRUCTION AND THEREAFTER UNTIL TAKEOVER); • FINALLY THERE MUST BE A CHARGE FOR THE MAINTENANCE PERIOD DEPENDING ON THE NATURE OF MAINTENANCE COVER REQUIRED IN TERMS OF THE CONTRACT; • THE CUMULATIVE RATE IS THEN APPLIED TO THE CIVIL PORTION OF THE CONTRACT VALUE TO PRODUCE A PREMIUM.

  18. PREMIUM COMPUTATIONCONTRACT WORKS – STRUCTURAL WORKS 1 • There is a specific rate % for each project type e.g.. RESIDENTIAL BUILDINGS, OFFICE BLOCKS, HOTELS, HOSPITALS, SHOPPING MALLS, BRIDGES, FACTORY PREMISES, WATER TOWERS CHIMNEYS AND THE LIKE; • THE APPLICABLE RATE X (SAY 1%) MUST THEN BE APPORTIONED TO RISK CATEGORIES, FOR EXAMPLE, (THESE % ARE JUST AN ILLUSTRATION AND ARE NOT REALISTIC) STORM/WIND 20% FIRE/LIGHTNING/EXPLOSION 30% COLLAPSE/LANDSLIDE 35% THEFT/MALICIOUS DAMAGE 15%; • NEXT ONE MUST ONE MUST DECIDE ON THE EXTENT OF THE RISK APPLICABLE TO EACH CATEGORY, THUS FIRE ETC. ARE 30% OF X(X BEING SAY 1%) (30%X)= 0.3% BUT THE WORK IS BEING UNDERTAKEN OUT OF THE LIGHTNING SEASON AND ALL PACKING MATERIALS ARE REMOVED FROM THE BUILDING THEREFORE THIS RISK IS REGARDED AS MINIMAL SAY 20% OF THE NORM, OUR RATE FOR THIS PORTION IS THUS 20% OF 0.3% =0.06%; • THE SAME CALCULATION IS CARRIED OUT FOR EACH OF THE OTHER CATEGORIES OF THE RATE X;

  19. PREMIUM COMPUTATIONCONTRACT WORKS – STRUCTURAL WORKS 2 • THE NEXT PART OF THE CALCULATION IS TO TAKE INTO ACCOUNT THE PERIOD ON RISK, THIS MAY NOT ONLY BE THE CONSTRUCTION PERIOD, BUT THE RISK MAY CONTINUE UNTIL TAKE-OVER OF THE COMPLETED PROJECT AS IN THE CASE OF A TURNKEY PROJECT; • IT MUST BE REMEMBERED THAT IF TAKE-OVER IS TO BE DELAYED UNTIL FINAL COMPLETION, THEN THE STRUCTURAL RISK WILL BE AT RISK FOR AN EXTENDED PERIOD WHICH MUST BE DETERMINED ESPECIALLY IF MACHINERY IS TO BE INSTALLED BEFORE TAKE-OVER OF THE COMPLETED STRUCTURE THUS AN ADDITIONAL CHARGE FOR THE EXTENDED PERIOD AFTER CONSTRUCTION IS WARRANTED; • FINALLY THERE MUST BE A CHARGE FOR THE MAINTENANCE PERIOD DEPENDING ON THE NATURE OF MAINTENANCE COVER REQUIRED IN TERMS OF THE CONTRACT; • THE CUMULATIVE RATE IS THEN APPLIED TO THE STRUCTURAL PORTION OF THE CONTRACT VALUE TO PRODUCE A PREMIUM.

  20. PREMIUM COMPUTATIONCONTRACT WORKS – ELECTRICAL & MECHANICAL WORKS - 1 • UNLIKE CIVIL AND STRUCTURAL RATING, THE ELECTRICAL AND MECHANICAL RATE IS BUILT UP OVER A NUMBER OF FACTORS, THESE ARE: • HANDLING AND STATIC TESTING • TESTING AND RUNNING • FIRE AND SPECIAL PERILS DURING CONSTRUCTION • FIRE AND SPECIAL PERILS DURING TESTING • ENVIRONMENT • BENEFICIAL USE IF REQUIRED IN TERMS OF CONTRACT • MAINTENANCE ONCE AGAIN BASED ON THE REQUIRED COVER; • EACH OF THESE RATE COMPONENTS HAS ITS OWN SPECIFIC RATE WHICH EXCEPT FOR THE HANDLING AND STATIC TESTING RATE ARE ADJUSTED TO TAKE IN TO ACCOUNT THE PARTICULAR PERIOD OF COVER AND RISK FACTOR. EACH OF THESE RATE COMPONENTS ARE EXPLAINED AS FOLLOWS:

  21. PREMIUM COMPUTATIONCONTRACT WORKS – ELECTRICAL & MECHANICAL WORKS - 2 • HANDLING AND STATIC TESTING: THIS RATE COMPONENT ALLOWS FOR PRE ERECTION STORAGE ON SITE, MOVEMENT FROM STORAGE TO POINT OF ERECTION, HOISTING ONTO FOUNDATIONS, ASSEMBLY THEN NON ENERGISED TESTING • TESTING AND RUNNING: IT IS AT THIS STAGE THAT POWER IS FIRST APPLIED TO THE MACHINE AND FEEDSTOCK INTRODUCED. EFFECTIVELY THIS COVER EQUATES TO MACHINERY BREAKDOWN COVER. THE PERIOD IS USUALLY RESTRICTED TO 30 DAYS ON WHICH THE MACHINERY IS OPERATED FOR TESTING PURPOSES. IT IS ASSUMED THAT ALL MANUFACTURERS SAFETY REQUIREMENTS AND COMMISSIONING PROCEDURES WILL BE ADHERED TO AND THAT SAFETY DEVICES WILL NOT BE OVERRIDDEN OR NULLIFIED. IT IS USUAL THAT WHERE THERE ARE ANY UNTRIED FEATURES OR PROTOTYPES THAT TESTING COVER WILL BE EXCLUDED; • TESTING COVER IS USUALLY ONLY GIVEN ON NEW MACHINERY;

  22. PREMIUM COMPUTATIONCONTRACT WORKS – ELECTRICAL & MECHANICAL WORKS - 3 • FIRE AND SPECIAL PERILS: THESE RISKS ARE NO DIFFERENT TO THOSE GIVEN UNDER A FIRE OR ASSETS POLICY, ACCORDINGLY, THE RATE SHOULD BE SIMILAR TO THE STANDARD FIRE POLICY. THIS COMPONENT IS DIVIDED INTO TWO CATEGORIES, NAMELY DURING CONSTRUCTION AND THEN DURING TESTING AND RUNNING. A LESSER RATE SHOULD BE APPLIED TO THE CONSTRUCTION PERIOD POSSIBLY 50% OF FIRE & PERILS RATE, WHEREAS THE FULL RATE SHOULD BE APPLIED TO THE TESTING PERIOD. IN BOTH INSTANCES THE RATE SHOULD BE ADJUSTED FOR THE PERIOD OF COVER; • ENVIRONMENT: THIS COMPONENT TAKES INTO CONSIDERATION THE RISKS OF THEFT, MALICIOUS DAMAGE GEOTECHNIC AND HYDROLOGY RISKS AND A VARIETY OF OTHER MINOR PERILS.

  23. UNDERWRITING CRITERIAPUBLIC LIABILITY - 1 • THIS SECTION OF THE POLICY PROVIDES FOR LIABILITY TO THIRD PARTIES IN RESPECT OF LOSS OF OR DAMAGE TO PROPERTY OR PERSONAL INJURIES OR DEATH OF PERSONS NOT BEING EMPLOYEES OR THE FAMILY OF THE INSURED PARTY; • WE ARE NOT TALKING ABOUT A SEPARATE POLICY, BUT AS A SECTION TO A CONSTRUCTION POLICY, THUS ANY LIABILITY INCURRED SHOULD ORIGINATE AT THE CONTRACT SITE IN CONNECTION WITH SITE ACTIVITIES DURING THE PERIOD OF INSURANCE; • TO PROVIDE FOR ANY WIDER COVER A GENERAL LIABILITY POLICY SHOULD BE TAKEN OUT IN THE ACCIDENT DEPARTMENT; • THERE ARE TWO BASES OF COMPUTING PUBLIC LIABILITY PREMIUMS EITHER ON: • LIMIT OF LIABILITY, • OR CONTRACT VALUE; • NEITHER BASIS CAN BE CONSIDERED SUPERIOR TO THE OTHER, EFFECTIVELY THE PREMIUM SHOULD BE THE SAME;

  24. UNDERWRITING CRITERIAPUBLIC LIABILITY - 2 • RECOGNISING THAT THERE ARE TWO ACCEPTABLE BASES, WHAT FACTORS SHOULD BE TAKEN INTO CONSIDERATION IN COMPUTING THE PREMIUM; • ALL THOSE LISTED HEREUNDER WILL EITHER BE PROMINENT IN THE PREMIUM CALCULATION OR OF LITTLE OR NO EFFECT, EACH MUST BE CONSIDERED ON MERITS: • IS THE SITE A GREEN FIELDS OR BROWN FIELDS SITE, IS THERE A POSSIBILITY OF DAMAGE TO EXISTING PROPERTY EITHER ON-SITE OR ON SITES ADJACENT TO THE CONTRACT SITE, • IS THE RISK LOCATION IN/OUT OF TOWN – ARE THERE ANY PUBLIC SERVICES IN THE VICINITY, • ARE ANY EXPLOSIVES TO BE USED, • DEPTH OF EXCAVATION/ GEOTECHNIC RISKS, • EXPERTISE AND TRACK RECORD OF CONTRACTOR AND DESIGN ENGINEER, • WORKING METHODS AND DESIGN, PLAN OR SPECIFICATION, • RISK MANAGEMENT; • THE POTENTIAL RISK OF SPREAD OF FIRE TO ADJACENT PROPERTIES EITHER ON SITE OR IN THE PROXIMITY THERETO

  25. UNDERWRITING CRITERIATHIRD PARTY LIABILITY - 3 • EXTENSIONS OF COVER • ARE THE SELECTED EXTENSIONS OF COVER TO BE WITHIN THE OVERALL LIMIT OF INDEMNITY OR ARE THEY TO HAVE SEPARATE LIMITS OF INDEMNITY? IF SO, PLEASE PROVIDE THE REQUIRED LIMITS • EXTENSION OF COVER LIMIT OF INDEMNITY • ARREST,ASSAULT, DISCHARGE • OR DEFAMATION R00,000,000 • EMERGENCY MEDICAL EXPENSES R 000,000 • PREVENTION OF ACCESS R 0,000,000 • LEGAL DEFENCE COSTS R 0,000,000 • TRESSPASS OR NUISANCE R00,000,000

  26. PREMIUM COMPUTATIONPUBLIC (THIRD PARTY) LIABILITY - 1 • THE CALCULATION BEGINS WITH A BASIC RATE % WHICH IS A FUNCTION OF THE LIMIT OF INDEMNITY WHICH ENVISAGES A 12 MONTH CONTRACT PERIOD, THE BASIC RATE DIFFERS ACCORDING TO WHETHER IT IS TO BE APPLIED TO THE CONTRACT VALUE OR THE LIMIT OF INDEMNITY; • THE FIRST ADJUSTMENT TAKES INTO CONSIDERATION THE PERIOD OF THE CONTRACT BY ADJUSTMENT UPWARDS OR DOWNWARDS FOR LONGER OR SHORTER PERIODS FROM TAKE-OVER OF SITE UNTIL FINAL HANDOVER OF THE PROJECT; • THE NEXT ADJUSTMENTS TAKE INTO CONSIDERATION THOSE PREVIOUSLY MENTIONED WHICH ARE AS FOLLOWS:

  27. PREMIUM COMPUTATIONPUBLIC (THIRD PARTY) LIABILITY - 2 • IS THE SITE GREEN FIELDS OR BROWN FIELDS IS THERE A POSSIBILITY OF DAMAGE TO EXISTING PROPERTY EITHER ON-SITE OR ON SITES ADJACENT TO THE CONTRACT SITE; • IS THE RISK LOCATION IN/OUT OF TOWN – ARE THERE ANY PUBLIC SERVICES IN THE VICINITY; • ARE ANY EXPLOSIVES TO BE USED; • DEPTH OF EXCAVATION/ GEOTECHNIC RISKS; • EXPERTISE AND TRACK RECORD OF CONTRACTOR AND DESIGN ENGINEER; • WORKING METHODS AND DESIGN, PLAN & SPECIFICATION; • RISK MANAGEMENT; • FINALLY THE EXTENSIONS MUST BE ADDRESSED:

  28. PREMIUM COMPUTATIONPUBLIC (THIRD PARTY) LIABILITY - 3 • ARREST, ASSAULT, DISCHARGE AND DEFAMATION, • EMERGENCY MEDICAL EXPENSES, • PREVENTION OF ACCESS, • LEGAL DEFENCE COSTS, • TRESSPASS OR NUISANCE. • THE COMPUTATION OF THE REMOVAL OF SUPPORT RISK IS UNDERTAKEN ON MUCH THE SAME BASIS, BUT THE BASIC RATE IS MUCH HIGHER THAN FOR STANDARD LIABILITIES; • WE HAVE NOT MENTIONED THE RISKS APPLICABLE TO IMPLOSION OF BUILDINGS BEFORE NOW, HOWEVER, THESE ARE MUCH MORE ONEROUS THAN ORDINARY LIABILITIES OR REMOVAL OF SUPPORT LIABILITIES, BUT WE DO NOT BELIEVE THESE RISKS TO BE APPROPRIATE TO THIS DISCUSSION.

  29. PREPARING A QUOTATION • IT IS IMPORTANT FOR THE UNDERWRITER TO BE AWARE OF HOW THE QUOTATION IS PRESENTED, YOU LIVE BY YOUR WRITTEN WORD, OR LACK THEREOF; • CLEARLY, IF THE INTERMEDIARY HAS ASKED FOR A CERTAIN EXTENSION AND THIS ASPECT HAS NEITHER NEGATIVELY NOR POSITIVELY BEEN ADDRESSED, IT CAN BE ARGUED THAT THE REQUEST HAS BEEN ACCEPTED; • THE FOLLOWING SUGGESTED QUOTATION WORDING MAY ASSIST IN EXPRESSING CLEARLY THE INTENTION; • AS AN INTERMEDIARY YOU TOO SHOULD DEFINE CLEARLY THE NATURE AND EXTENT OF COVER YOU ARE REQUESTING, THE ONUS IS THEN ON THE UNDERWRITER TO ACCEPT OR REJECT YOUR REQUEST BY WRITTEN COMMENT IN THE QUOTQTION PRESENTED.

  30. SUGGESTED QUOTATION WORDINGWORKS PLUS PUBLIC LIABILITY - 1 • XYZ INSURANCE COMPANY LIMITED (THE INSURER) • 25 SUMMER PLACE, GLORIOUS COVE • INSURER’S CONTACT PERSON: JOHN DOE • TELEPHONE NUMBER: 011 398 0000 E-MAIL ADDRESS DOEJ@XYZINS.CO.ZA • DATE OF QUOTATION: 1ST JULY, 2010 • CLIENT: ABC MANUFACTURING LIMITED • INTERMEDIARY: SMITH AND JONES BROKERS - R SMITH • INSURED PROJECT: NEW ELECTRIC MOTOR MANUFACTURING FACILITY FOR ABC MANUFACTURING • PROJECT VALUE: R25,500,000 • CIVIL WORKS R5,000,000 • STRUCTURAL WORKS R7,500,000 • ELECTRICAL/MECHANICAL WORKS R10,240,000 • PRELIMINARY & GENERAL R2,760,000

  31. SUGGESTED QUOTATION WORDINGWORKS PLUS PUBLIC LIABILITY - 2 • POLICY WORDING: • XYZ INSURANCE COMPANY LIMITED CONTRACT WORKS WORDING OR ANY OTHER WORDING AS MAY BE AGREED BY THE COMPANY (XYZ INS CO LTD) (THE INTERMEDIARY MAY HAVE SUBMITTED A POLICY WORDING AS PART OF HIS QUOTATION REQUEST, YOU MUST COMMENT THEREON AS TO ITS ACCEPTABILITY OR OTHERWISE AND REFER TO AN ACCEPTABLE WORDING) • THE INSURED PARTIES: • THE PRINCIPAL: • ABC MANUFACTURING LIMITED • THE SITE CONTRACTOR: • MLM CONTRACTORS (PTY) LIMITED • SUB-CONTRACTORS: • EMPLOYED ON THE CONTRACT SITE (EMPLOYED BY THE CONTRACTOR(S) OR NOMINATED BY THE PRINCIPAL) BUT ONLY TO THE EXTENT OF LOSS, DAMAGE OR LIABILITY ORIGINATING AT THE CONTRACT SITE ARISING OUT OF THEIR SITE INVOLVEMENT EXCLUDING ANY PROFESSIONAL ACTIVITY OR OFF-SITE MANUFACTURING OR MANUFACTURING GUARANTEES

  32. SUGGESTED QUOTATION WORDINGWORKS PLUS PUBLIC LIABILITY - 3 • THE INSURED PARTIES (CONTINUED): • ANY OTHER NAMED PARTY PROPOSED TO AND ACCEPTED BY THE INSURER SUCH AS PROJECT MANAGERS, MANUFACTURERS, SUPPLIERS OR PROFESSIONALS BUT ONLY TO THE EXTENT OF LOSS, DAMAGE OR LIABILITY ORIGINATING AT THE CONTRACT SITE, EXCLUDING ANY PROFESSIONAL ACTIVITY OFF-SITE MANUFACTURING PROCESS OR MANUFACTURERS GUARANTEES; • BASIS OF INDEMNIFICATION: • CONTRACT WORKS LIMIT OF INDEMNITY • THE INSURED PROPERTY R25,500,000 • EXPEDITING COSTS • 50% OF AGREED CLAIM EXCEEDING R100,000 OR • WHERE LOSS DOES NOT EXCEED R100,000 50,000 • ESCALATION • DURING CONTRACT PERIOD 15% • DURING PERIOD OF DAMAGE REINSTATEMENT 15%

  33. SUGGESTED QUOTATION WORDINGWORKS PLUS PUBLIC LIABILITY - 4 • CURRENCY FLUCTUATION 20% • DEMOLITION AND DEBRIS REMOVAL • ASSOCIATED WITH DAMAGE TO WORKS R00,000,000 • WITHOUT DAMAGE TO THE WORKS R00,000,000 • PROFESSIONAL FEES R 0,000,000 • FIRE BRIGADE CHARGES R 0,000,000 • PUBLIC AUTHORITIES CHARGES R 0,000,000 • PUBLIC AUTHORITIES REINSTATEMENT R 0,000,000 • OFF-SITE STORAGE NOT AT MNFRS. R 0,000,000 • WORK AWAY R 0,000,000 • REMOVAL TO A PLACE OF SAFETY R 0,000,000 • RECORDS AND PLANS R 0,000,000 • CLAIMS PREPARATION COSTS R 0,000,000

  34. SUGGESTED QUOTATION WORDINGWORKS PLUS PUBLIC LIABILITY - 5 • THIRD PARTY LIABILITY • LIMIT OF INDEMNITY R00,000,000 • INCLUDED IN LIMIT OF INDEMNITY • LEGAL DEFENCE COSTS R 0,000,000 • EMERGENCY MEDICAL EXPENSES R 000,000 • TRESSPASS OR NUISANCE R 0,000,000 • ARREST ASSAULT DISCHARGE DEFAMATION R 000,000 WHERE A ZERO HAS BEEN PLACED OPPOSITE AN ITEM THIS MEANSTHAT NO COVER IS TO BE GIVEN FOR THAT ITEM. NOTE TO UNDERWRITER THE LIMITS FOR THE EXTENSIONS SHOWN ABOVE ARE NOT NECESSARILY SUB LIMITS INCLUDED IN THE OVERALL LIMIT OF INDEMNITY. IF UNDERWRITTEN AS ADDITIONAL LIMITS THE WORDS “INCLUDED IN LIMIT OF INDEMNITY” SHOULD BE OMITTED AND THE WORDS “ADDITIONAL TO LIMIT OF INDEMNITY” ADDED

  35. SUGGESTED QUOTATION WORDINGWORKS PLUS PUBLIC LIABILITY - 6 • THE PROPERTY INSURED: • THE PERMANENT WORKS BEING ALL WORKS AND PROPERTY AS DESCRIBED IN THE CONTRACT DOCUMENTS AS THE CONTRACT WORKS AND ANY TEMPORARY WORKS CREATED OR INSTALLED IN ORDER TO CONSTRUCT THE PERMANENT WORKS; • PERIOD OF COVER: • COVER COMMENCES WITH THE HANDING OVER OF THE CONTRACT SITE TO THE CONTRACTOR, OR THE DELIVERY OF MATERIALS AND OTHER THINGS FOR INCORPORATION INTO THE PROJECT; DURING ANY PERIOD OF STORAGE ON OR ABOUT THE CONTRACT SITE AWAITING INCORPORATION, CONSTRUCTION OR ERECTION • DURING ANY PERIOD OF OFF-SITE STORAGE AT ANY SITE AGREED BY THE INSURER WHICH SHALL NOT INCLUDE SUPPLIERS OR MANUFACTURERS PREMISES, • WHILST BEING CONSTRUCTED, ERECTED OR INSTALLED,

  36. SUGGESTED QUOTATION WORDINGWORKS PLUS PUBLIC LIABILITY - 7 • PERIOD OF COVER: PERIOD OF COVER (CONTINUED): • DURING ANY PERIOD OF CONTRACTUAL BENEFICIAL OCCUPATION OF ANY COMPLETED OR PARTIALLY COMPLETED WORKS DECLARED TO AND ACCEPTED (IN WRITING) BY THE INSURER NOT EXCEEDING MONTHS DURING ANY CONTRACTUAL MAINTENANCE PERIOD COVERING DAMAGE: OCCURRING DURING CONTRACTUAL VISITS BY THE CONTRACTOR OR MANUFACTURER FOR THE PURPOSE OF CALIBRATION ADJUSTMENT OR MAKING GOOD DEFECTS OR DAMAGE DUE TO CONSTRUCTION OR ERECTION OR MAKING GOOD ANY DAMAGE DONE DURING SUCH CONTRACTUAL VISITS DAMAGE DUE TO PRIOR DEFECTS OR DEFECTIVE CONDITIONS BUT EXCLUDING THE DEFECTIVE CONDITION ITSELF, WHICH SHOULD FORM THE SUBJECT OF A MANUFACTURER’S GUARANTEE OR PROFESSIONAL INDEMNITY;

  37. SUGGESTED QUOTATION WORDINGWORKS PLUS PUBLIC LIABILITY - 8 • THE DEDUCTIBLES: • IN RESPECT OF EACH AND EVERY CLAIM ARISING OUT OF OR IN CONNECTION WITH ANY ONE EVENT OR OCCURRENCE OR SERIES OF OCCURRENCES ARISING OUT OF OR IN CONNECTION WITH ANY ONE EVENT, THE INSURED SHALL BEAR THE FIRST: • PERIL EXCESS • COLLAPSE R0,000 • STORM, WIND, TEMPEST, FLOOD, SNOW, R0,000 HAIL, SLEET, FROST SUBSIDENCE, LANDSLIP R0,000 DEFECTIVE DESIGN, PLAN, R0,000 SPECIFICATION FIRE, LIGHTNING, EXPLOSION R0,000 THEFT, MALICIOUS DAMAGE R0,000

  38. SUGGESTED QUOTATION WORDINGWORKS PLUS PUBLIC LIABILITY - 9 • RATE AND PREMIUM BASED ON CONTRACT VALUE: • CONTRACT WORKS 0,00% R000,000 • THIRD PARTY LIABILITY 0,00% R 00,000 • TERMS AND CONDITIONS OF QUOTATION: • 1. THIS QUOTATION HOLDS GOOD FOR 90 DAYS FROM THE DATE SHOWN AS THE “DATE OF QUOTATION”; • 2. THE QUOTATION IS BASED ON THE UNDERWRITING INFORMATION SUPPLIED BY THE INTERMEDIARY WHICH SHALL FORM THE BASIS HEROF EXCEPT AS EXCLUDED HEREIN SHOULD THERE BE ANY CHANGES IN THE INFORMATION SUPPLIED THE COMPANY RESERVES THE RIGHT TO AMEND THIS QUOTATION ACCORDINGLY; • 3. THE DEFECTS EXCEPTION ENVISAGED HEREBY IS THE ‘COSTS ADDITIONAL’ ‘DE5’ ,LEG2’ ETC.;

  39. CONTRACTOR’S LIABILITIES • A CONTRACTOR CAN INCUR LIABILITIES FROM MANY SOURCES THUS HE NEEDS A PACKAGE OF LIABILITY COVERS OVER AND ABOVE THAT GIVEN UNDER A CONTRACT WORKS OR CONSTRUCTION POLICY. IT CAN EVEN BE SAID THAT A COMPREHENSIVE LIABILITY PACKAGE SHOULD INCLUDE HIS POTENTIAL CONSTRUCTION RISKS LIABILITIES. ACCORDINGLY, THE CONSTRUCTION POLICY SHOULD EXCLUDE THE CONTRACTOR’S LIABILITIES, HOWEVER, WHERE OTHER PARTIES ARE INVOLVED ON THE CONSTRUCTION SITE THEY MAY NEED TO BE COVERED FOR CONSTRUCTION LIABILITIES. • THE QUESTION THEN ARISES, SHOULD THE CONSTRUCTION POLICY WAIVE SUBROGATION RIGHTS AGAINST THE CONTRACTOR?

  40. CONTRACTOR’S LIABILITY POLICY -1 • LET US EXAMINE THE RECOMMENDED COMPONENTS TO A COMPREHENSIVE CONTRACTOR’S LIABILITY POLICY: • IT IS UNUSUAL FOR THIS TYPE OF POLICY TO BE UNDERWRITTEN IN THE CONSTRUCTION OR ENGINEERING DEPARTMENT IT IS MORE AN ACCIDENT DEPARTMENT RISK, • FIRSTLY, WE MUST UNDERSTAND THAT THESE COVERS CAN EITHER BE BASED ON “CLAIMS MADE” OR “CLAIMS INCURRED” • THE FORMER BASIS RECOGNISES THAT ANY CLAIM LODGED AGAINST THE INSURED DURIUNG A PARTICULAR PERIOD OF INSURANCE, IRRESPECTIVE OF WHEN THE TRIGGERING EVENT OCCURRED, SHALL BE REGARDED AS VALID AS LONG AS IT FALLS WITHIN THE AMBIT OF THE POLICY, • ON THE OTHER HAND ON A CLAIMS INCURRED BASIS ANY CLAIM LODGED AGAINST THE INSURED MUST THEN REVERT TO THE POLICY IN FORCE AT THE TIME THAT THE TRIGGERING EVENT OCCURRED;

  41. CONTRACTOR’S LIABILITY POLICY -2 • THE FOLLOWING ARE THE MORE COMMON SECTIONS TO A COMPREHENSIVE Contractor’s Liability Policy: • PUBLIC LIABILITY -GENERAL AND CONTRACTING LIABILITIES • PRODUCTS LIABILITY –PRODUCTS MANUFACTURED OR SUPPLIED • EMPLOYERS’ LIABILITY –INJURY OR SICKNESS ARISING OUT OF EMPLOYMENT, • PROFESSIONAL INDEMNITY –BREACH OF PROFESSIONAL ACTIVITY OR DUTY, • MOTOR EXCESS OF LOSS LIABILITY –DUE TO LOSS OR ACCIDENT DURING THE PERIOD OF THE POLICY, • PRODUCTS GUARANTEE –LIABILITY FOR PRODUCTS SUPPLIED, SOLD ,INSTALLED ETC., • PRODUCT RECALL –WHERE SUCH PRODUCT MAY CAUSE INJURY OR DAMAGE, • CARRIERS LIABILITY –DAMAGE ARISING OUT OF THE CARRIAGE OF GOODS INCLUDING CONSEQUENTIAL LOSS,

  42. CONTRACTOR’S LIABILITY POLICY -3 • LIABILITY SECTIONS CONTINUED: • PLANT HIRE LIABILITY –LEGAL LIABILITY FOR LOSS OR DAMAGE IN TERMS OF A HIRE AGREEMENT INCLUDING CONSEQUENTIAL LOSS, • PURE ECONOMIC LOSS –CLAIMS MADE DURING THE PERIOD OF INSURANCE OTHER THAN FOR PROFESSIONAL SERVICES FOR COMPENSATION IN TORT, DELICT OR STATUTE; • THE EXTENSIONS OF COVER ARE SIMILAR TO THOSE UNDER THE MORE SPECIFIC CONSTRUCTION POLICY LIABILITY SECTION; • WHERE A MORE SPECIFIC POLICY INCLUDING LIABILITIES HAS BEEN TAKEN OUT THE CONTRACTOR’S LIABILITY POLICY WILL ONLY PROVIDE LIABILITY FOR DIFFERENCES IN COVER OR LIMIT OF INDEMNITY, IT WILL NOT BE BROUGHT IN • TO CONTRIBUTION WITH THE MORE SPECIFIC POLICY;

  43. CONSTRUCTION PLANT INSURANCE - 1 • WHAT COMPRISES PLANT UNDER A CONSTRUCTION POLICY? • MOBILE PLANT AND EQUIPMENT: MOBILE CRANES, CRAWLER CRANES, DUMP TRUCKS, BULLDOZERS, ROAD SCRAPERS, BACKACTORS, EXCAVATORS, ROAD TANKERS (WATER, FUEL OR BITUMEN), ROAD ROLLERS; • NON MOBILE PLANT AND EQUIPMENT: • CONCRETE BATCH PLANT, CONCRETE MIXERS AIR COMPRESSORS, ELECTRICITY GENERATING PLANT, MINI SUB-STATIONS, CONVEYOR SYSTEMS, TOWER CRANES, WELDING GENERATORS AND TRANSFORMERS; • MINING PLANT AND EQUIPMENT: DRAGLINES, EXCAVATORS, JUMBO DRILL RIGS, MINING SCOOPS, DUMP TRUCKS AND MINE WINDERS LONG WALL COAL CUTTERS, MINING SCOOPS AND TUNNELL BORING MACHINES;

  44. CONSTRUCTION PLANT INSURANCE - 2 • CLASSES OF OWNERSHIP: • CONTRACTORS WHO OWN PLANT FOR CONTRACTING WORK; • PLANT OWNED FOR OWN USE SUCH AS MINING OPERATIONS, INDUSTRIAL WORKS AND SERVICE INDUSTRIES; • PLANT HIRE COMPANIES FOR HIRE TO CUSTOMERS; • VIRTUALLY EVERY PROJECT REQUIRES PLANT OF ONE TYPE OR ANOTHER, LET US CONSIDER THE VARIOUS CATEGORIES OF PLANT: • CONSTRUCTION CONTRACTORS: • BUILDING CONTRACTORS – CONCRETE BATCH PLANT, CRANES MOBILE, CRAWLER AND TOWER, CONCRETE MIXERS, CONCRETE ESCALATORS, PUMPS CONCRETE AND WATER, EXCAVATORS, BACKACTORS AND THE LIKE • ROAD CONSTRUCTION CONTRACTORS – THESE CONTRACTORS USE A LARGE VARIETY OF PLANT SUCH AS, SCRAPERS, EXCAVATORS, ROLLERS, BULLDOZERS, BACKACTORS, MOBILE CRANES,AIR COMPRESSOR SETS, PAVING MACHINES ETC.;

  45. CONSTRUCTION PLANT INSURANCE - 3 • MINING OPERATIONS (MAINLY OPENCAST): • EXCAVATORS, DRAGLINES, JUMBO DRILLS, EARTH MOVING TRUCKS, MINING SCOOPS, CONVEYOR SYSTEMS, CRUSHERS, CRANES, COMPRESSORS, DIESEL GENERATING PLANT ETC. • IN SOME INSTANCES THE PLANT MAY INCLUDE MINE WINDERS • OR TUNNELL BORING MACHINES; • PLANTHIRE COMPANIES: • THEIR PURPOSE IS AS A SERVICE TO CONSTRUCTION, MINING AND INDUSTRY, TO PROVIDE PLANT AND MACHINERY AS REQUIRED FOR A VARIETY OF JOBS. SOMETIMES THESE HIRE COMPANIES ARE A DIVISION WITHIN A CONSTRUCTION, MINING OR INDUSTRIAL COMPANY, THE PURPOSE OF WHICH IS TO SEPARATE THE COSTLY AND ONEROUS OWNERSHIP OF PLANT AND MACHINERY FROM THEIR CORE BUSINESS, WHETHER THIS BE CONSTRUCTION, MINING OR OTHER INDUSTRIAL ACTIVITY;

  46. CONSTRUCTION PLANT INSURANCE – 4THE NEED FOR INSURANCE • THIS TYPE OF PLANT & EQUIPMENT IS GENERALLY HIGH RISK, SUSCEPTIBLE TO IMPACT, FIRE, THEFT AND ELEMENTAL PERILS. WE ARE NOT SUGGESTING THAT THE USERS DO SO NEGLIGENTLY, CARELESSLY OR WITHOUT REGARD FOR POSSIBLE DANGER OR DAMAGE. PLANT IS USUALLY OPERATED BY A DEDICATED OPERATOR OR OPERATORS, THUS THE ONUS FOR ANY UNDUE OPERATION OF THE PLANT RESULTING IN DAMAGE COULD BE PEGGED AT THE DOOR OF AN INDIVIDUAL. IT MUST BE APPRECIATED THAT THIS TYPE OF PLANT HAS LARGE QUANTITIES OF FUEL OIL AND HYDRAULIC OIL BOTH OF WHICH ARE HIGHLY INFLAMABLE; • DEPENDING ON THE TERRAIN IN WHICH IT WORKS TOPPLING OVER OR OVERTURNING IS A VERY REAL RISK; • IN VIEW OF THE ELEMENT OF RISK WHICH IS HIGH & VARIED IT WOULD BE UNWISE NOT TO INSURE THE PLANT.

  47. CONSTRUCTION PLANT INSURANCE – 5THE INSURANCE POLICY COVER • THE COVER IS SIMILAR FOR ALL CLASSES OF OWNERSHIP • AS THIS EQUIPMENT IS ESSENTIALLY FOR OUTDOOR USE, IT QUALIFIES FOR WHAT CAN BE TERMED ‘ALL RISKS’ COVER. THIS DOES NOT MEAN THAT THERE ARE NO TERMS AND CONDITIONS APPLICABLE TO THE INSURANCE, INDEED THERE ARE LIMITING FACTORS TO THE COVER. THE COVER EMBRACES: • ELECTRICAL AND MECHANICAL BREAKDOWN (OPTIONAL COVER) • FIRE LIGHTNING EXPLOSION • ELEMENTAL PERILS • FLOOD • THEFT MALICIOUS DAMAGE • IMPACT COLLISION OVERTURNING • UNINTENTIONAL OVERLOADING

  48. CONSTRUCTION PLANT INSURANCE – 6THE INSURANCE POLICY EXCEPTIONS • ALTHOUGH WE REFER TO THE COVER AS BEING ‘ALL RISKS’, NEVERTHELESS THERE ARE SOME EXCEPTIONS THESE ARE AS FOLLOWS: • WEAR AND TEAR AND GRADUAL DETERIORATION; • PENALTIES FOR DELAY AND GUARANTEES OF PERFORMANCE; • LOSS OF USE; • TYRES AND TUBES; • EXPENDABLE PARTS AND TOOLS; • THEFT NOT IDENTIFIABLE WITH A SPECIFIC INCIDENT; • TANDEM OR MULTIPLE LIFTS; • EXISTING DEFECTS, WILFUL ACTS OR NEGLIGENT ACTS; • EXPERIMENTS OR INTENTIONAL OVERLOADING; • WHILST BEING OPERATED BY A PERSON: • UNDER THE INFLUENCE OF INTOXICATING LIQUOR OR DRUGS, • AUTHORISED BY THE OWNER OR HIS RESPONSIBLE PERSON WHO IS NOT QUALIFIED TO OPERATE THE PLANT • ELECTRICAL OR MECHANICAL BREAKDOWN (IF OPTION NOT REQUIRED);

  49. CONSTRUCTION PLANT INSURANCE – 7HIRED-IN PLANT POLICY AMENDMENT • THE POLICY WORDING IS GENERALLY SIMILAR WHETHER COVERING OWNED PLANT OR HIRED-IN PLANT, TO ACHIEVE THE ADJUSTMENT TO THE STANDARD POLICY THE FOLLOWING MEMORANDA ARE INCLUDED: • A) THE INSURED’S LEGAL LIABILITY UNDER ANY HIRING AGREEMENT TO PAY COMPENSATION FOR PHYSICAL LOSS OF OR DAMAGE TO ANY INSURED HIRED-IN MACHINERY WHILST UNDER HIS CUSTODY OR CONTROL AT THE INSURED’S PREMISES DESCRIBED IN THE SCHEDULE HERETO; • B) THE INSURED’S LEGAL LIABILITY UNDER ANY HIRING AGREEMENT TO PAY CONTINUING HIRE CHARGES IN CONSEQUENCE OF PHYSICAL LOSS OF OR DAMAGE TO THE INSURED HIRED-IN MACHINERY DESCRIBED IN THE SCHEDULE HERETO FOLLOWING INDEMNIFIABLE LOSS OR DAMAGE PROVIDED FOR IN A) ABOVE; • AS PREVIOUSLY STATED THE POLICY REQUIRES THAT ANY HIRING AGREEMENT SHALL BE NO MORE ONEROUS THAN THE CPHA CONDITIONS.

  50. CONSTRUCTION PLANT INSURANCE – 6HIRED IN/OUT PLANT & MACHINERY • THIS PLANT AND EQUIPMENT IS HIRED IN/OUT UNDER SPECIFIC HIRING CONDITIONS. INSURERS PREFER THE CONDITIONS AS PUBLISHED BY THE PLANT HIRE ASSOCIATION KNOWN AS THE CPHA CONDITIONS. THE CPHA CONDITIONS ARE CONSIDERED TO BE THE MOST FAIR FROM BOTH THE OWNER’S AND THE HIRER’S POINTS OF VIEW. IN FACT, A POLICY COVERING HIRED PLANT OFTEN INCLUDES A MEMORANDUN WHICH STATES: • “THIS INSURANCE IS BASED ON HIRING AGREEMENTS NO MORE ONEROUS THAN THOSE PUBLISHED BY THE CONTRACTOR’S PLANT HIRE ASSOCIATION, SHOULD PLANT HAVE BEEN HIRED UNDER OTHER HIRING AGREEMENTS THEN ANY LOSS OR DAMAGE COVERED UNDER THIS POLICY WILL BE ADJUSTED AS IF THE CPHA CONDITIONS HAD BEEN IN FORCE”