Question about vehicle insurance requirements
Jul 29, 2018
I recently received a question from an insurance consultant for a client who is commissioning a thesis on a floor in an office tower and who takes out his own insurance for the construction work and requires our client - the execution contractor - to have additional insurance: professional liability, product liability and insurance for construction equipment. We should note that our client - the execution contractor - does not own construction equipment, and if he is required to have such equipment at all - they are brought to the site by subcontractors.
Here is the question:
We saw that the policy was expanded in relation to the client's project to include an agreed upon liability limit to cover professional liability, and this is correct.
However, as you can see, the insurer deleted the coverage for property and casualty insurance.
Although, according to the wording of the agreement, the contractor is entitled not to insure his property (since there is an exemption clause), with regard to the TMA insurance, there is the component of coverage for third-party damages, including the extension of indemnity to the client, and this deletion is problematic.
Thank you for checking the above point with the contractor.
Below is the answer I gave:
1. Of course this is a complete mistake.
2. A distinction must be made between a CMA vehicle, which is also a vehicle subject to mandatory insurance, and a CMA vehicle that is not subject to mandatory insurance.
3. If this is a vehicle that is subject to compulsory insurance - then in terms of bodily injury - it is subject to the Compensation for Road Accident Victims Law (including consolidation of causes), while in terms of third party property - you must purchase in the contractor policy under your responsibility an extension of coverage for third party property damage above the liability limit of the offending vehicle. (If we had contractor work insurance - then the coverage would be NIS 4 million for this section).
4. Regarding CMA tools that are not subject to mandatory insurance - it must be ensured that there is an extension in the contractor's policy that the client has taken out, for bodily injury resulting from the use of CMA tools within the full limit of liability, while in terms of property damage - the coverage should apply in full in the contractor's policy since there should be no exception to this in the third-party insurance in the contractor's policy. (If the works insurance were arranged through us - then there is no exception to this).
5. Either way - in this case, the contractor does not own any CMA equipment and therefore does not hold Clal CMA insurance.
6. If at all, CMA vehicles were used in the project (in my opinion, such vehicles were not used because this involves finishing work on high floors) - then the solution is in the contractor's policy that the client issues and in requiring the contractor to ensure that CMA vehicles, which are considered vehicles and require mandatory insurance - brought in by subcontractors, will be insured with mandatory and third-party insurance.
In conclusion:
1. It turns out that most of the burden here falls on the client who arranged the works insurance - to ensure that the policy is prepared properly and professionally and includes appropriate extensions as stated in sections 3-5.
2. The contractor, for his part, must ensure that mandatory and third-party insurance is in place for the CMA vehicles that are considered vehicles.
3. It is acceptable to include an exemption for the client in relation to what is stated in subsection B above because there is no practical way to manage this. Including the requirement in the confirmation of the existence of supplementary insurance is for the record only.
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