Many thanks to the 200 odd Agents who attended the CPD Training on Contractor's All Risk Insurance held at Concorde Hotel, Kuala Lumpur today, 15th June 2011.
The Q&A time was most beneficial with some very good questions posted by Agents to the Trainer. One of the question that needs further clarification is related to "Designers Risk".
I have enquired with 2 experienced Underwriters and made further reading on the CAR Policy wordings on the same subject, I can conclude as follows:
1) The Policy does not contained words like "Designer's Risks" nor "Defective Design"
2) The Policy does mentioned the words "Faulty Design"
3) There are no such combination of words like "Defective design, defective workmanship or defective materials" but only defective Workmanship and defective materials
3) The words "Designer's Risk" are used in the endorsement to provide part cover (DE3) or full cover (DE5)due to faulty design
Meaning, loss or damage due to Faulty Design is a total exclusion (expressly stated under Section c of Special Exclusions to Section 1) but can be extended by payment of additional premium to include resultant damage only (exclude the part caused by faulty design) or full cover (include the damage caused by faulty design). Please note that Underwriter does not usually grant the full cover.
On the defective materials and/or workmanship, it excludes the items immediately affected by the defective materials and/or workmanship but resultant damage to the correctly executed items is covered.
They are two stand alone exclusions.
Any comments are welcome.
Thank you for your timely update on this question. Its understood now. have a great day !
ReplyDeleteReally it is nice post and thanks for sharing it
ReplyDeleteOver 50s life insurance
Can you please explain "items immediately affected" - is that include also "correctly executed items" that was immidiately affected?
ReplyDeleteThanks
Items immediately affected by the faulty design is excluded. Resultant damage to correctly items are covered.
ReplyDeleteExample; Take a wall, code named A, B, C & D. If section A collapsed caused by faulty design and caused further damage to section B & C which are executed correctly, then only A is excluded whilst B &C are payable.
This Designer's risk extension (DE3) must be taken up otherwise the whole losses would be excluded under the CAR Insurance
example: dowels, that hold an acoustic ceiling, found (during maintenance period) to be defective.
ReplyDeleteThe insured should replace the whole ceiling. Based on MR115- what is excluded and what is covered?
Thanks
Zvi
Dowels that was found defective are excluded. Unless there are physical damage done to the ceiling as a result of the defects, Insured/Contractor will have to replace the ceiling at their own cost
ReplyDeleteI have learned a lot from this post.
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ReplyDeleteinsurance agent website design