I. Introduction and Cases

In the large-scale construction project special legal services, the author has experienced a number of engineering insurance accident handling and litigation, now on the main types of engineering insurance cases (i.e.: engineering all risks insurance, third-party liability insurance, and migrant workers' work injury insurance) to share and discuss with you.

 

Case 1: Claim for all risks insurance for water damage and collapse of steel sheet pile cofferdam at the main bridge pier.

In August 2007, a highway bridge over the river pier 3 project underwater bearing platform is under construction, using steel sheet pile cofferdam in the river after the steel columns supporting the open excavation construction method, has been dug to about 10 meters underwater. On a certain day, the project upstream area of heavy rainfall, river water rise, just astronomical tidal wave, the surging river water will be under construction of steel sheet pile cofferdam extrusion collapse, resulting in damage to the project in progress and construction equipment damage accident. After the incident, the construction unit declared a loss of 12.7 million RMB for the engineering accident according to the amount of works visaed by the supervising engineer, and the construction unit filed a claim for the loss of engineering all risks insurance with the underwriting insurance company. After accepting the claim, the insurance company endorsed three opinions: firstly, the tide is not a force majeure category of one in ten years; secondly, the accident is caused by unreasonable calculation of support force of steel piles in the cofferdam of the construction unit, and the construction unit should be held fully responsible; thirdly, the engineering insurance is taken out by the construction unit (the owner), and does not insure the liability insurance of the construction unit. The insurance company's preliminary opinion to refuse to pay. As the construction unit of the highway project construction, to take a unified insurance engineering insurance, its insurance company with a special agreement with the insurance company signed the terms and conditions and clearly stated, ten years of tide should be based on local hydrological records, more than the historical water level records, that is, for force majeure, the insurance liability subject to the scope of the insurance includes all the participating construction units and enter the construction area. Thus, the insurance company had to agree to settle the claim, but then proposed to commission a third-party insurance appraisal company to assess the loss of the accident, and did not agree to calculate the amount of compensation based on the amount of work visaed by the supervising engineer, and the insurance appraisal company estimated the loss to be 8.7 million yuan. As a result, a dispute arose between the four parties over the replacement price of the engineering losses, and the case was settled by the insurance company with a compensation of 12 million yuan after a number of negotiations.

 

Case 2: Subrogation claim by a foreign insurance company after a fire in an airport advertising project resulted in the loss of stores.

In 2013, an international airport erected an advertising steel structure project in the marquee and entrusted the construction to Company A. Company A subcontracted the project labor to Company B, which in turn subcontracted it to Company C. Company B subcontracted to Company C. Due to the lack of training, unlicensed employees of Company C, welding operations at high altitude, sparks fell into the marquee of a brand clothing store, causing a fire that destroyed the store. The loss was assessed by an insurance company to be $6.8 million. As the clothing store had taken out a loss insurance policy with a foreign insurance company, the insurance company, after settling the claim, filed an insurance subrogation action against the airport unit and Companies A, B and C to claim compensation. As neither the airport unit nor Companies A and B had taken out engineering insurance, Company C had only taken out a $1 million third party loss insurance policy. Finally, the court ruled that Company C should compensate for the damage, and A and B should be jointly and severally liable. As companies B and C did not have the financial strength, and company A was a listed company, it had to pay the compensation first. In the end, the four parties fell back into litigation over the issue of shared responsibility for the loss.

 

Case 3: highway engineering migrant workers after traffic accidents, workers' compensation insurance claims.

In 2015, a provincial highway road for expansion project, a foundation company contracted, according to the labor team way subcontracted to other companies specific construction, which 3 teams of mountainous sections of the temporary employment of local farmers to undertake the site of the safety guard work, subcontracting company for them to buy engineering accident insurance 100,000 yuan / person. Blasting on a certain day, the northern section of Li surnamed migrant workers unauthorized motorcycle early home for dinner, midway through the non-primary responsibility for the death of a traffic accident. The family of the migrant worker, after obtaining more than 800,000 yuan of compensation for the traffic accident from the at-fault party, applied to the subcontracting company for 1.5 million yuan of compensation for work-related injuries. The local labor administrative department ruled that the farmer surnamed Li was determined to have died of work-related injuries. As a result, both parties filed a number of lawsuits with the court for administrative and work injury compensation. Due to the contracting unit, general contracting company, subcontracting companies are not to the local labor injury insurance co-ordination department, for migrant workers for the construction project injury insurance, and finally, in the court mediation, had to compensate the family one-time compensation for injury compensation of 900,000 yuan to close the case.

 

II. Concepts and types of engineering insurance

Insurance is a kind of contractual system which is protected by law and aims at dispersing the danger and absorbing the loss. Therefore, the existence of danger is the premise of insurance, but the danger on the insurance system has the uncertainty of loss occurrence, including the uncertainty of occurrence or not, the uncertainty of occurrence time and the uncertainty of occurrence consequences. Every construction project is born in the midst of perils such as natural disasters and accidents, and engineering insurance is a betting transaction between the insurer and the policyholder on property and personal risks based on engineering risks. The first engineering insurance policy was born in Britain since 1929, along with the pace of China's reform and opening up, was introduced into China in 1979, and gradually developed into a basic insurance system in China, but at present, China's laws have not yet been included in the legal provisions, only in the engineering policy and model contract documents, which will be included in the construction project needs to be considered as one of the major issues. Practice has proved that the introduction and development of engineering insurance has played a huge role in engineering risk protection in China.

Construction engineering activities involving engineering risks are more complex and diverse, and there are more types of engineering insurance. As far as the general concept is concerned, engineering insurance is the insurance that covers all accidental material losses during the construction and installation works and compensates the liability to the third party. Including construction all risks and installation all risks, is a comprehensive insurance. The subject matter of the insurance is the main body of the project, temporary facilities, machinery and equipment used in the project and third party liability; in addition, it also includes some engineering liability insurance, such as design liability insurance and supervision liability insurance. Insurance liability for the project period due to floods, rainstorms, earthquakes and other natural disasters caused by loss, fire, explosion, flying objects falling accident caused by loss, theft, malicious behavior and other man-made losses, raw material defects, defects in workmanship and other technical accidents caused by the loss as well as third-party damage liability. Engineering insurance contract, often also provides for deductibles and compensation limits. With the development of science and technology, engineering insurance insurance is also gradually expanding, such as public liability insurance; at the same time, other social security insurance has also been introduced, such as migrant workers injury insurance.

Replacement price in engineering insurance is a major issue in engineering insurance, in the insurance claims matters, the policyholder and the insurer often often disputes between the insurance company is often inclined to the insurance company. Therefore, the insurance contract provisions must be clear on the basis and method of calculating the replacement price of engineering losses after the occurrence of the insurance accident. Starting from the construction industry, replacement price refers to the normal price at which a new building with the same structure, function and utility as the original building can be reconstructed by using new building materials, construction technology and techniques under the current price of construction and renovation materials and cost of labor and services. Such normal price, the fixed or median price regularly announced by the local price department shall be the basis of pricing.

 

Ⅲ, the choice of engineering insurance and thinking

1, who should buy engineering insurance?

In the construction of the project, there are contracting units, general contracting units, subcontracting units, design units, supervision units, consulting services, materials and equipment supply units and other units involved in the construction. Due to the different division of labor, each of them becomes the responsible body for the corresponding engineering risks, but sometimes, the risk responsibilities are mixed together and cannot be distinguished. Therefore, who should purchase the engineering insurance? In the construction of the project has not been formed legal mandatory provisions. Very often, the contracting unit simply do not consider the engineering insurance or insurance responsibility, all contractual agreement to the contractor responsible for. However, with the development of engineering construction, we are increasingly aware that the engineering risk is entirely based on the construction unit (owner, contractor) construction projects; if not construction, of course, there will be no risk; risk makers, of course, to bear the risk of liability. Therefore, the trend that the risk responsibility should be borne by the construction unit and the purchase of engineering insurance, has become increasingly clear. For example, China's 2013 version of the "Construction Contract for Construction Works" (model text) provides that, unless otherwise agreed in the terms of the special contract, the contractor shall take out all risks of construction works or all risks of installation works; if the contractor is entrusted by the contractor to take out the insurance, the insurance premiums and other related costs arising from the insurance shall be borne by the contractor. Paragraph 18.1 of the 2017 version of the "Construction Contract for Construction Works" (model text) currently issued in China similarly stipulates that, unless otherwise agreed in the terms of the special contract, the contractor shall take out all risks of the construction works or all risks of the installation works; if the contractor is entrusted by the contractor to take out the insurance, the insurance premiums and other relevant costs arising from the insurance shall be borne by the contractor.

 

2、How to buy engineering insurance?

Engineering insurance has become an important insurance business of China's insurance companies, but China's insurance regulator has not guided them to form a unified engineering insurance contract terms, and major insurance companies have their own form terms. Based on the protection of their own rights, insurance companies have too many exemptions and exemptions in their insurance terms, which may lead to the situation of "accident occurs, but the insurance does not pay" if the policyholder does not know well and enter into an insurance contract with the insurance company through careful negotiation. Therefore, how to buy insurance is an important legal technical work. The author is engaged in engineering law special services, has always emphasized that the construction unit (i.e., the contractor, the owner) and the insurance company to negotiate insurance premiums included in the project cost, separate accounting, may not be included in the project bidding price. Construction unit should focus on predicting the risk of the project under the premise of targeted and insurance companies to finalize the terms of the insurance contract; at the same time, to all participating units of the possible risks, but also included; at the same time, but also the insurance company to give up on the subrogation of the liable body. Case one of this paper fully illustrates, by the construction unit unified purchase engineering insurance benefits and advantages. Such as its insurance conditions, signed with targeted special provisions, covering the risk of each subcontracting unit responsibility, the insurance company also gave up the right of subrogation. Therefore, in the event of an accident, the insurance company claims can be carried out smoothly. Case 2, on the other hand, illustrates that since the construction unit did not purchase project insurance uniformly, the contracting unit did not purchase it either, which eventually led to a series of lawsuits. Generally speaking, due to the huge investment of the construction unit, its premiums can be considerable, the insurance company is generally easy to accept the construction unit's reasonable underwriting conditions; while the specific construction unit, construction in the risk of the first line, the subject of its bidding project subject to small, small premiums, the insurance company will not generally accept the construction unit's reasonable underwriting conditions.

 

3. Should we pay attention to the work injury insurance of migrant workers?

Regular employees of the construction unit, generally in the company's co-ordination area to participate in social security, but in the construction of large-scale projects, the temporary recruitment of local farmers, engaged in some auxiliary work is a frequent occurrence. The issue of workers' compensation insurance for these temporarily recruited staff is often given hasty attention. Especially in the case where the construction tasks are subcontracted several times, the subcontracting companies will not consider the issue of workers' compensation insurance for the temporary workers. However, it has been proven that because these temporary workers lack the necessary engineering safety training and experience, and because they are engaged in what may be the most dangerous and tiring work, the probability that they will be involved in injuries or fatalities is increased. The construction unit will generally assume that the migrant workers' accident insurance is not part of the project insurance coverage, and they will also purchase personal accident insurance for the temporary workers on site, and the contracting unit will only emphasize the migrant workers' accident insurance. However, Case 3 illustrates that the consequences of such negligence are quite serious. Li surnamed migrant workers in the home on the way to its non-primary responsibility for traffic accidents, according to China's "Work Injury Insurance Regulations", although it is a temporary worker, but it should be entitled to the same treatment as the regular employees with the same regard to work-related injuries. In this regard, China's original relevant laws and policies, the at-fault party of the deceased's family compensation, can be offset against its personal compensation for work-related injuries in a part of the family shall not obtain overlapping compensation. But now, the judicial practice from the "personal invaluable" legal concept, has been based on different legal relationships occurring in personal injury compensation, to be dealt with separately and calculate the compensation. For this reason, under the premise that the migrant workers are injured in accidents, the person himself or his family can claim accident compensation from the at-fault party based on the relationship of traffic accidents; at the same time, he can claim compensation for work-related injuries from the employer based on the labor relationship; at the same time, he can also claim compensation from the insurance company based on the relationship of accident insurance, which do not constitute an overlapping relationship. Therefore, it is important to pay attention to the issue of work injury insurance for migrant workers, if not, the employer will probably bear the aforementioned multiple overlapping compensation.

In fact, China's labor and social security departments, in 2004 during the rural migrant workers have issued a document on the issue of work-related injury insurance, requiring that "not in the employer's registered place to participate in work-related injury insurance of rural migrant workers, should be in the place of production and business to participate in the work-related injury insurance 、、、、 employers are not in the place of production and business to participate in the work-related injury insurance for rural migrant workers, rural migrant workers suffered from accidental injuries or suffered from occupational diseases, the place of production and business for work-related injury recognition, work-related injuries and compensation. If the employer fails to participate in work-related injury insurance for the migrant workers in the place of production and operation, after the migrant workers are injured in accidents or suffer from occupational diseases, they shall be recognized for work-related injuries and appraised for their labor capacity in the place of production and operation, and the work-related injury insurance treatment shall be paid by the employer in accordance with the regulations of the place of production and operation. For this reason, a "system for migrant workers to participate in work-related injury insurance on a project-by-project basis" has been set up under the supervision of the social insurance department of the place of production and operation, whereby the construction unit allocates a special fund as a non-competitive expense to pay the work-related injury insurance premiums for the migrant workers. However, because the system is not mandatory, most construction units do not implement it seriously; in practice, it is the employers who end up bearing the consequences of failing to apply for work-injury insurance for their migrant workers.