Compensation for negligence by a contractor that caused damage to an external contractor's truck

Sep 23, 2019

T.M. 28926-02-18

By: Itzick Simon

Construction sites regularly invite subcontractors who come through the site gates. More than once, these contractors bring with them tools, heavy equipment, vehicles, and equipment to the site. If damage occurs to these tools, it is not long before a dispute arises between the parties regarding the identity of the person responsible for paying compensation. You can see an example of this important issue in the above ruling, which concludes with a critical reference to the insurance aspect.

Circumstances of the case – A transportation and logistics company claimed that due to negligence on the part of a worker at the Ashdod Port, which caused a container to be unloaded incorrectly, a truck owned by it suffered extensive damage. The defendant, Ashdod Port, claimed, on the other hand, that the accident was caused by the negligence of the truck driver, who did not follow the safety rules at the scene, and while unloading the container, he drove backwards at high speed.

Parties to the proceedings – The lawsuit was filed by the transportation and logistics company, its owner and driver, against Ashdod Port Company Ltd.

T.M. 28926-02-18

By: Itzick Simon

Construction sites regularly invite subcontractors who come through the site gates. More than once, these contractors bring with them tools, heavy equipment, vehicles, and equipment to the site. If damage occurs to these tools, it is not long before a dispute arises between the parties regarding the identity of the person responsible for paying compensation. You can see an example of this important issue in the above ruling, which concludes with a critical reference to the insurance aspect.

Circumstances of the case – A transportation and logistics company claimed that due to negligence on the part of a worker at the Ashdod Port, which caused a container to be unloaded incorrectly, a truck owned by it suffered extensive damage. The defendant, Ashdod Port, claimed, on the other hand, that the accident was caused by the negligence of the truck driver, who did not follow the safety rules at the scene, and while unloading the container, he drove backwards at high speed.

Parties to the proceedings – The lawsuit was filed by the transportation and logistics company, its owner and driver, against Ashdod Port Company Ltd.

The Ashkelon Magistrate's Court, which heard the claim, ruled that the defendant would pay the requested compensation. In the first stage, the court listened to the truck driver's testimony, and found it credible, honest, simple and correct. This was in contrast to criticism leveled at the crane operator's testimony, which the court said "tended to exaggerate" important details, and even harsher criticism against the port's safety officer, whose testimony was (unusually) described as "aggressive and arrogant." The court was not overly impressed with the investigation report of the incident prepared by the Ashdod Port. Among other things, the ruling determined that the driver's version in the report was not clear enough, and that the report was not accompanied by a form with his signature and/or visual documentation of the accident scene. "The circumstances support the negligence of the crane operator and not the negligence of the driver," the judge ruled.

The above case did indeed occur at the Ashdod Port, but it teaches us several points that are also true for construction sites (due to the involvement and negligence of the beneficiary). First and foremost, although the amount involved is not very high (approximately 60,000 shekels), it is clear to everyone that damage to heavy vessels may be much higher. Moreover, in addition to the payment of compensation in the final line, the defendant was charged legal costs, and it is certainly possible that its costs were higher in light of the conduct of the legal proceedings.

In essence, it is necessary to understand the complex insurance aspects relating to the tension between contracting work and the use of tools, facilities, and engineering mechanical equipment (EMME). In particular, it is important to know that the contracting policy may offer its insureds only a limited response in the event of an incident.

Chapter A of the Contractors' Works (Property) Insurance Policy defines insurance for light equipment and fixtures up to a ceiling only. Usually up to 10% of the project value and for the value of a single item up to NIS 40,000. The perception that this is "all risks" insurance that also includes insurance for engineering tools is incorrect (but unfortunately, prevalent).

What about vehicles? It is important to check that every vehicle that arrives at the site is well insured with third-party insurance. This is because the contractor's policy excludes damage caused to third-party property due to the use of a vehicle. The third-party coverage in a contractor's work insurance policy due to the use of a vehicle will only be "above the standard liability limit of the offending vehicle," which at its lowest level is usually about 400,000 shekels.

An insured in a contractor's policy must be aware of this limitation, and must not rest on his laurels. He must actively act to ensure that all engineering tools and vehicles entering the site gate are insured by their owners with the required insurance . Starting from mandatory insurance and ending with comprehensive insurance (including, of course, third-party insurance). It is advisable to include in contracts with subcontractors a waiver of liability clause and an exemption clause that clearly explains that the owners of the tools are responsible for their insurance, and that there is no reliance on the insurance purchased by the work orderer, the contractor or the developer.