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Construction Law/Sub-clause 18.4 (1999 Red Book)


Hello Mr. Elliot,

I'm reviewing the insurance requirements under Sub-clause 18.4 for a contract in Costa Rica, here we have a compulsory insurance requirement for every employer, named "Riesgos del Trabajo" (RT). In general this insurance provides medical assistance, rehabilitation and, loss wages for employees who suffer an occupational accident or disease, including some cover for spouse and/or children, etc.  

I read that in other countries there exist a similar policy called Worker's Compensation, which have two parts:

1) Worker's Compensation: which have a similar cover to what "Riesgos del Trabajo" covers in Costa Rica.
2) Employer's Liability: which covers liabilities arising from damage to employees that are not covered in the Worker's Compensation cover.

My question is: if the requisite of 18.4 is only for the 2nd part of that policy? (maybe because the first part is compulsory in most countries).  In that case, if the Employer does not want the second part, or if that cover is not available: can we eliminate the 18.4?

I read several books about the issue but I'm still not clear.

Thanks in advance for your answer.

Dear Pablo CÚsar,

I am not sure that I understand your question.  However, here goes.  

Even if the part of the requirement is covered by the applicable law, I would not delete clause 18.4 as it attracts the Contractor's attention to the need for the appropriate insurance, plus you have to complete the relevant sections of the Appendix to Tender.  Should you wish, you could specify the relevant legislation either in the Appendix to Tender or the Particular Conditions.  With regard to the second section, I doubt that the insurance cover is unavailable.  It might be expensive, but it should be available.  If the Employer wishes to delete this clause, then he would be obliged to provide his own insurance.  It could also cause problems with compensation, if the Contractor injured an employee of the Engineer or the Employer.

All in all, you could delete the clause, but you would be ill advised so to do.  

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Peter M. Elliott


First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol before submitting a question.


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