A fire causing damage on a building site usually means an insurance claim. Which might be followed by a subrogation claim, by the insurers who have paid out on the original claim, against the party responsible. But what if that party is a subcontractor and the project CAR policy includes subcontractors in its list of insureds? Does the policy protect the subcontractor against a subrogation claim?
In the first case where the court has had to decide how construction subcontractors participate in project insurance policies, the court analysed the subcontractor’s position. It concluded that a standing offer is made by insurers to insure those who are subsequently ascertained as members of the defined group. The offer is accepted by a subcontractor joining, on executing the subcontract, and that acceptance leads to the implication of a term in the subcontract. In this case, however, under its subcontract, the roofing subcontractor was required to obtain its own insurance cover. Did that make a difference?
The court ruled that that express obligation excluded the possibility of implying a term to the contrary. The court also noted that the cases repeatedly emphasise that the answer in any particular case is one of construction, which therefore critically depends, in each case, on the provisions of the particular contract. In this case that meant the terms of the roofing subcontract and the judge questioned how the parties could have intended to create an insurance fund as the sole avenue for making good relevant loss or damage, when they had expressly agreed that the subcontractor would obtain its own separate insurance. To the extent that the subcontractor was contractually required to have its own individual insurance cover, it was therefore not entitled to the protection of the project insurance and the project insurers could bring a subrogated claim against it.