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Construction Law/Third Party Liability Insurance


QUESTION: Dear Florin,

As part of one of my Contract Administration we are facing a problem with Main Contractor related to Third Party Liability Insurance, for your kind reference am quoting our wordings in General Condition and relevant Appendix to Condition.

"General Third Party Liability Insurance for loss or damage to any property of third party or injury, illness or death to any personnel of third party which may arise out of or in connection with the execution of the WORKS by the CONTRACTOR or his SUB-CONTRACTOR(S) or their employees, servants or agents, up to an amount stated in the Appendix to Conditions"

Appendix to Conditions: General Third Party Liability Insurance with a limit of not less than AED. 2.0 Million per occurrence for property damage and unlimited indemnity for death of or injury to person(s).

As per Main Contractor, in UAE Insurance Companies are not issuing Insurance Certificate with "unlimited indemnity for death of or injury to person(s)". In this regards, please give your valuable advise  whether Third Party insurance with unlimited indemnity for death of or injury to person(s) is as per international standard practices.

Sr. Contracts Engineer

ANSWER: Dear John,

Thank you for your question.

I believe you're in a bit of dead end with that as indeed, I am uncertain what insurer will it provide such an insurance, regardless in national or international. Mind you, we/re talking about construction industry, where deaths are not such a remote probability.

In addition, law of the country may not allow that too.

I would suggest you sit down withe the Contractor and see what change might be acceptable/ feasible.

Where that request is coming from, what was in the Employer's mind when they wrote that? What do they actually want?

looking at the wording in the Appendix, I am tempted to believe it is just a poor phrasing, without someone really targeting something, as normally, there are generally defined upper limits.

Based on such iterative queries, I believe you can come at a reasonable conclusion.

Hope that helps.

---------- FOLLOW-UP ----------

QUESTION: Dear Florin,

Thanks for your valuable and immediate response in this matter, moreover please note that as an Employer representative i have to safe guard our interests based on our policies and procedure. The wordings in Appendix (included in initial mail)is from standard ADNOC Contracting terms and conditions, which is followed for a long time, since i joined with this Group recently i also follow the same wordings while drafting my Tender Documents (now signing of the Contract is pending due to this issue).

In specific the requirement of "unlimited indemnity for death of or injury to person(s)" is reasonable and its all up to the discretion of Court ruling. Generally our projects are in Oil & Gas sector and its with more chances of fatality.

In this regards please advise me about the upper limit, if Insurance Providers are reluctant to comply with our requirement.  So that i can negotiate with Main Contractor for logical solution.

Thanks and Regards.

ANSWER: Dear John,

Thank you for coming back.

By all means, I did not think of not safe guarding client's interest, sorry if it looked like that.

I simply never met an "unlimited" indemnity, but seen indeed some wrong wordings that could not be covered by insurers.

Now let's try and see what we can do to help:

Is that "unlimited" meaning
a) an unlimited amount per occurrence
b) an unlimited number of occurrences?

If a), then indeed, I do not see how can it be covered, I'll make some enquiries and will get back to you if any positive outcome.

If b), the wording van be changed to reflect it and think that can become acceptable by potential insurers.

Please see if above suggestion can help and at my end, will try to see what information I can gather.

Talk to you later.

---------- FOLLOW-UP ----------

QUESTION: Dear Florin,

Thanks once again for quick reply, i think we are moving towards the right track. We are looking for "an unlimited amount per occurrence" and the amount is always determined by UAE Court, as per UAE Rules Blood money value is very high and its always changing from case by case. We as Client have to protect the rights of all our Third Party (our operations are corelated and there is number of Contractros working under one umberla at a time) in respect of "Life". So either we have to Go with the Unlimited option or conclude a reasonalble "limit" as per International conditions which is applicable and normally practiced in UAE situation.

So kindly give your advise whether I have to stick with our "Unlimited Option" or provide the resonable limit as practiced.



Dear John,

Thank you for coming back, glad we manage to define what exactly we need.

But, I have to confess, I was rather thinking of the other option.

In this case, indeed, "blood money" is something difficult to deal with and seems that current contract provisions are reflecting exactly that.

Which brings us back to square one, i.e. to the difficulty of having an insurer willing to insure to the unlimited.

Very honestly, I must state it clear I am not familiar with that, so be aware when reading my suggestions, but my engineering common sense tells me to look for something sensible, in the given situation.

So, we have on hand hand the "unlimited" and the "impossible to insure" in the other. In that situation, I'd suggest you identify based on previous cases what the amounts might be, per occurrence, add something to stay on the safe side and just indicate that as an upper limit, which would probably make it acceptable to the insurers.

At a terrible cost, but acceptable for them.

If the contract is not yet signed, Contractor can then cost for it and include it in their offer.

What do you think about that? Can you work out something along that?

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Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.


Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List and of DRBF Chapter for Eastern Europe Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List Member of “” volunteers pool Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States

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