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J.C.T. Conditions - Insurance

J.C.T Contracts

The J.C.T. Standard Form (Incorporating Amendments)  (Insurance Clause numbers 22, 22a, 22b, 22c and 22d).

Clause 22

As already mentioned, this J.C.T. Standard Form recognises the need for insurance on an "All Risks" basis. This first clause sets out exactly what is meant by the term "All Risks":-

"Insurance which provides cover against any physical loss or damage to work executed and Site Materials and against the reasonable cost of the removal and disposal of debris and of any shoring and propping of the Works which results from such physical loss or damage but excluding the cost necessary to repair, replace or rectify.


These terms are probably self-explanatory, with the exception of "Defective Design". As explained in the previous chapter (Policy Exclusions) this exclusion is deliberately worded in a precise fashion so as to require that only a limited form of design cover is obtained.

There is, however, a footnote in the contract conditions which states that the policy wordings of Insurance Companies are not standardised. This recognises that there will always be some variation in the extent of cover provided and it will not always be possible to acquire "All Risks" cover precisely in line with the definition.


Whilst the definition of "All Risks" contained in Clause 22 excludes loss or damage arising from terrorism in Northern Ireland there is no exclusion for damage of this kind on the mainland of Great Britain.

Whichever party to a Contract is responsible for the insurance of the works it is incumbent on them to purchase full Terrorism Cover since Insurers will have limited their liability for fire and explosion arising from Terrorism to 100,000.


We have now established that All Risks cover is necessary to meet the requirements of Clause 22. The next three "Sub-Clauses" deal with the question of who is responsible for arranging insurance cover, e.g. the Architect, Employer and/or Contractor. Who arranges insurance cover is largely dependent on the type of work and the various parties involved will normally have agreed this before the contract starts.

Clause 22a:
is applicable to the erection of new buildings where the Contractor is required to take out a policy in Joint Names for "All Risks" Insurance on both the works and site materials.

Clause 22b:
is also applicable to new buildings but the Employer/Principal opts to be responsible for taking out a suitable policy in Joint Names.

Clause 22c:

is used for alteration of or extension to existing buildings. This clause is further sub-divided into two parts, i.e:


concerns the existing structure and contents and requires the Employer/Principal to effect a policy in joint names on the property against a range of "Specified Perils". It is advisable at this point to clarify the term "Specified Perils" as defined in Sub Clause 1.3. Unfortunately terminology in the various editions of the J.C.T. contracts over the years has not been consistent. Whatever they were previously called - R.I.B.A. perils, J.C.T. perils or Clause 22 perils, all defined "Specified Perils" as-


concerns the Contract Works and site materials and requires the Employer/Principal to effect a policy in Joint Names for "All Risks" insurance.


Whichever sub clause applies, the Conditions require that Sub-Contractors are included either as a joint policyholder or, by waiver of subrogation rights, covered in respect of the range of Specified Perils. Sub Clause 22c.1 also makes a distinction between Nominated and Domestic Sub-Contractors. Under this clause Domestic Sub-Contractors do not receive the benefit of being included as a joint insured by waiver of subrogation rights; only Nominated Sub-Contractors receive this benefit.

Clause 22d: Insurance for Employers Loss of Liquidated Damages
This is a new insurance clause which was added to the J.C.T. form by Amendment No. 2 in 1986. Some explanation of its application is required which cannot be appreciated without some background to its introduction.

Contract forms make provision for penalties for delay in the completion of the Contract and these are in the form of liquidated damages i.e. a fixed amount per week for the duration of the delay. If the Contractor does not complete on time they may be liable to pay liquidated damages. The amount to be paid is inserted in the appropriate place in the Appendix to the Contract. It is recognised that certain events beyond the control of the Contractor can lead to delay, such as bad weather. In recognition of this a list of these events is included under Clause 25 of the Standard Form of Contract, these are known as relevant events. If one or more of such events causes delay and the Architect allows the Contractor an extension of time the liquidated damages cannot be applied.

Among the relevant events listed is loss or damage by any of the specified perils. Therefore if the works are damaged by, for example fire, which delays the completion of the Contract, and the Architect has allowed the Contractor an extension of time, the Employer cannot sue for the liquidated damages. When the amendments were being drawn up it was felt that some protection for the Employers loss of liquidated damages in such circumstances should be made available. It was decided therefore to include a new Clause 22d. This gives the Employer the option to seek a quotation for the insurance of liquidated damages arising from damage to


  1. Contract Works
  2. Plant and Equipment
  3. Temporary Buildings
Caused by a specified peril, and where the Architect has allowed an extension of time for the completion of the contract.