Clause- by- clause| FIDIC | Red book 1999|clause-18

Clause 18- Insurance

Sub clauses:-

• General requirements for Insurances
• Insurance for Works and Contractor's Equipment
• Insurance against Injury to Persons and Damage to Property
• Insurance for Contractor's Personnel

Detailed Interpretation of Sub clauses :-

• General requirements for Insurances :-Insuring Party refers to the party responsible for arranging and maintaining the insurance as specified in the relevant sub-clause. This can either be the Employer or the Contractor, depending on the type of insurance required. When the Contractor is the insuring party, the insurance terms and the choice of insurers must be approved by the Employer. These terms should align with any prior agreements made before the Letter of Acceptance. When the Employer is the insuring party, the insurance terms must be consistent with the details provided in the Particular Conditions of the contract .If an insurance policy needs to cover multiple insured parties (joint insurance), the policy must treat each insured party as if they have separate policies. This means that claims by one insured party do not affect the coverage of another. If the Contractor is required to act on behalf of additional joint insured parties (except the Employer’s Personnel), they must do so under the terms of the policy. Additional insured parties (e.g., subcontractors) do not have direct dealings with the insurer. Instead, their interactions are mediated through the insuring party (typically the Contractor or the Employer, depending on the specific insurance).The insuring party must provide evidence that the required insurances have been effected within the time periods specified in the contract. Copies of the insurance policies, especially those related to the works and contractor’s equipment (Sub-Clause 18.2) and third-party liability (Sub-Clause 18.3), must be provided to the other party. Both parties are required to comply with the conditions stipulated in the insurance policies. The insuring party must keep the insurer informed of any relevant changes to the execution of the works to ensure the insurance remains valid. Neither party can make significant changes to the insurance terms without the other party’s approval. If an insurer attempts to alter the terms, the party first notified must inform the other party immediately.
• Insurance for Works and Contractor's Equipment :-The Contractor must insure the works, materials, and Contractor’s equipment against loss or damage. Coverage must extend from the commencement date until the date of issue of the Taking-Over Certificate. Insurance must cover risks such as fire, explosion, theft, and natural disasters, except for risks excluded under Sub-Clause 18.3 . The policy may exclude risks covered under Sub-Clause 18.3 [Insurance Against Injury to Persons and Damage to Property].
• Insurance against Injury to Persons and Damage to Property:- The Contractor must insure against liability for injury, sickness, disease, or death of any person, and loss or damage to property arising out of the performance of the contract. This includes liability to third parties and excludes the Employer’s and Contractor’s personnel. The insurance must provide coverage as specified in the contract data. Coverage must exclude liabilities described in sub-paragraphs (d)(i), (ii), and (iii):(i) Exemplary, punitive, consequential, or indirect damages.(ii) Loss or damage to property not forming part of the works, owned by the Employer, the Contractor, or third parties.(iii) Contractor’s equipment, materials, and supplies not covered by the policy.
• Insurance for Contractor's Personnel :- The Contractor must insure against liability for injury, sickness, disease, or death of the Contractor’s personnel. This does not include the Employer’s personnel unless explicitly stated. The insurance must be maintained from the commencement of work until the date of issue of the Performance Certificate.

In a nut shell :-

Clause 18 of the FIDIC Red Book 1999 deals with insurance. It outlines the obligations of both the Employer and the Contractor to procure and maintain various types of insurance throughout the contract period. This is essential for protecting against potential risks and liabilities associated with the construction project.