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Article 58 Insurance Main Contractor’s Insurance

58.1 The Main Contractor shall effect and maintain at its own expense the insurance cover as specified in Articles 58.2 through 58.5. It shall provide terms and conditions as are reasonably available in the insurance market and that are customarily purchased by contractors on similar projects with regard to size, technology, location and the insurance cover. These covers will include the Subcontractor and its subcontractors as co-insured parties and the insurers shall waive their rights of subrogation to that extent. The Main Contractor will provide the Subcontractor with a summary of the terms and conditions and deductibles of the Main Contractor’s Insurances as per Articles 58.2 through 58.5 no later than 30 Days before any of the risks of the Subcontractor which are insured under the policies as per Articles 58.2 through 58.5 will attach.

58.2 If not determined otherwise¹⁷in the Schedule of Subcontractual Amendments to this Subcontract, the Main Contractor will effect and maintain Marine Cargo Insurance for not less than 100 % of the value of the goods being conveyed as part of the Subcontract Works during transportation with conveyances of whatsoever kind from any warehouse worldwide until and including unloading at the Site. This cover shall not be less than the internationally known Institute Cargo Clauses (A) of the Institute of London Underwriters, provided war risks are available at base rate and the deductible shall not be higher than the amount per occurrence specified in the Schedule of Subcontractual Amendments.

58.3 Construction/Erection All Risk Insurance shall cover loss or damage to the Works on all risks basis for not less than the full reinstatement Cost, subject to sub-limits as are reasonably commercially available and with exclusions customarily required by the insurance market, such as the exclusion of the terrorism risk. This insurance shall cover any Site activity after unloading of the Works at the Site, including storage on or near the Site, construction, erection, assembly, cold and hot commissioning and testing until the Taking- Over Certificate is issued or deemed to be issued. This cover acts as primary cover for the Subcontractor in respect of the Subcontract Works. With regard to loss or damage to any of the Works not being Subcontract Works, cover hereunder is subsidiary to any Subcontractor’s Third Party Liability Insurance.

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58.4 The policy conditions shall comply with good international standards and shall contain all terms and conditions and endorsements as are customarily available in the insurance market. The Construction/Erection All Risk Insurance shall also cover loss or damage to the Works arising from the consequences of faulty Design, material or workmanship (in accordance with the internationally known Design Clauses LEG 2/96 or Munich Re Endorsement 200). The general deductible in such policies shall not exceed the amount per occurrence specified in the Schedule of Subcontractual Amendments.

58.5 The Main Contractor shall maintain the Construction/Erection All Risk Insurance to provide cover during the Defect Correction Period for a period as is indicated in the Schedule of Subcontractual Amendments for loss or damage for which the Subcontractor is liable arising from a cause occurring through Site activities prior to the Date the Taking-Over Certificate is issued or deemed to be issued, and for Loss or damage caused by the Subcontractor in the course of any other operations in connection with its Defect liability obligations under the Subcontract (“Extended-Maintenance cover”).

Subcontractor’s Insurance

58.6 The Subcontractor shall effect and maintain at its own expense the following insurance cover with reputable insurance carriers authorised to do business in the Country:

1. Employer’s liability and workman’s compensation insurance in accordance with any applicable law(s). If the law does not provide for any obligations in this respect or requires only some minimum limits, then the Subcontractor shall arrange this insurance in a manner and with limits as a prudent and reasonable subcontractor in the same circumstances and environment would so do. This insurance shall be maintained in full force and effect during the whole time that Subcontractor’s Personnel are assisting in the execution of the Works on Site.
2. Automobile liability insurance in the Country in accordance with any applicable law(s). If the law does not provide for any obligations in this respect or requires only some minimum limits, then the Subcontractor shall arrange this insurance in a manner and with limits as a prudent and reasonable subcontractor in the same circumstances and environment would so do.
3. Comprehensive Third Party Liability Insurance to cover Subcontractor’s legal liability with a limit as required in the Schedule of Subcontractual Amendments, or, if nothing is mentioned thereunder, with a limit of indemnity of not less than 1,000,000 EUR (or equivalent in other currency) per occurrence and 2,000,000 EUR (or equivalent in other currency) in the aggregate.¹⁸[Page76:]
4. Subcontractor’s Equipment insurance to cover loss or damage to Subcontractor's Equipment on an all risks basis for not less than the full replacement value, during any activity on the Site and including delivery to Site.
5. If so determined in the Schedule of Subcontractual Amendments to this Subcontract, the Subcontractor will effect and maintain Marine Cargo Insurance for not less than 100% of the value of the goods being conveyed as part of the Subcontract Works during transportation with conveyances of whatsoever kind from any warehouse worldwide until and including unloading at the Site. This cover shall not be less than the internationally known Institute Cargo Clauses (A) of the Institute of London Underwriters, provided war risks are available at base rate and the deductible shall not be higher than the amount per occurrence specified (if any) in the Schedule of Subcontractual Amendments.

The Subcontractor’s Insurances as per Articles 58.6 (d) and (e) shall include the Main Contractor as a co-insured party and the insurers shall waive their rights of subrogation to that extent.

On request of the Main Contractor, the Subcontractor shall without undue delay provide to the Main Contractor insurance certificates of the Subcontractor’s Insurance.

The Subcontractor shall cause its subcontractors to effect and maintain at their own expense the insurance cover pursuant to Articles 58.6(a) through (e) as applied mutatis mutandis in relation to its personnel, automobiles, equipment and works subcontracted to it. The Subcontractor’s Insurances as per Articles 58.6(d) and (e) shall include the Main Contractor and Subcontractor as co-insured parties and the insurers shall waive their rights of subrogation to that extent.

Change of policy conditions

58.7 Neither Party shall make any changes or alterations in the policy conditions of the insurance that the Party is obliged to effect and maintain without having earlier notified the other Party of such changes or alterations and without having the approval of the other Party where the other Party’s rights and interests could be affected by any such changes or alterations. The insuring Party shall promptly notify the other Party if any of the insurers of the insuring Party’s insurance policies are cancelling or altering any of the insurance policies whereby any rights or interests of the other Party could be affected.

Insurance cover no effect on liabilities

58.8 Nothing in this Article 58 limits the obligations, liabilities or responsibilities of the Main Contractor or the Subcontractor under the other terms of the Subcontract and nothing in this Article shall be construed to increase the limitations on liability in the Subcontract. Any amounts not insured or not recovered from the insurers shall be borne by the Main Contractor and/or the Subcontractor in accordance with their obligations, liabilities or responsibilities. However, if the insuring Party fails to effect and keep in force an insurance that is available and that it is required to effect and maintain[Page77:]under the Subcontract and the other Party neither approves the omission nor effects insurance for the coverage relevant to this default, any monies that should have been recoverable under this insurance shall be paid by the insuring Party.

Damage mitigation

58.9 The Main Contractor and the Subcontractor acknowledge that in the event of damage, both Parties shall exert all reasonable efforts to mitigate the damage accruing from such event. In the event that the Subcontract Works sustain damage, notwithstanding the foregoing obligation to mitigate, the Subcontractor shall:

1. promptly notify Main Contractor;
2. take all necessary steps to preserve any damaged items, and not clean, destroy, discard or attempt to modify or unnecessarily move or remove any parts that are directly a part of the damage (except as is reasonably necessary to mitigate the damage and/or to ensure the safety of personnel); and
3. co-operate with, and assist in relation to, any survey carried out by any insurance loss adjustor as soon as is practically possible following the occurrence of the damage.

Policy terms take precedence over descriptions ¹⁹

58.10 The coverage referred to in this Article 58 is set forth in full in the respective insurance policies. The descriptions of such policies in this Subcontract are not intended to be complete, nor to alter or amend any provisions of the actual policies. In the event of a conflict between the insurance policies and this Subcontract, the provisions of the insurance policies shall prevail.

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