11 See page 187 above in connection with the contractors duty to complete. 12 See Chapter 10 below in this connection. 13 The relevant words in Sub-clause 48.1 are: The Engineer shall also notify the Contractor of any defects in the Works affecting substantial completion The relevant words in Sub-clause 49.2 are contained in paragraph (b) of that sub-clause. 226 INSURANCE CLAUSES IN STANDARD FORMS provided in a Contractors All Risks policy during the construction period and that provided during the Defects Liability Period, see page 249. The Engineer is also expected to inform the employer of the necessity to make his own insurance arrangements for such part of the works and perhaps to find out whether the employer has in fact acted accordingly.

The effect of taking over part of the works on the insurance cover is completely ignored in both of these forms of contract, a fact that exposes such part of the works to the risk of damage or loss without the benefit of insurance. Accordingly, as in the case of the whole of the works, before issuing a Taking-Over Certificate or a Certificate of Completion in respect of a part of the works, the insurance arrangements for such part must be ascertained taking into consideration the subrogation rights of the insurers. The right of subrogation is the right of an insurer who has paid for any loss or damage to claim from another party who is responsible for part, or all, of the loss or damage and who is uninsured by that insurer, see page 181.

It is not unusual for this insurance gap, which occurs when a part of the works had been taken over, to result in a problem at the final stages of construction, as the parties involved are more likely to be concerned with technical engineering matters rather than with insurance details. The result may also be unpredictable, as was the legal decision in the case of English Industrial Estates v. G.Wimpey.14 In that case, the contractor was engaged in 1969 to build a new extension to a factory belonging to the employer and leased to a certain lessee. The Conditions of Contract used were the Standard Form of Building Contract, JCT, which allocated to the employer, under Clause 16, the risk of fire in any part of the works that had been taken into possession. The employer allowed the lessee to install equipment and store material in a part of the newly constructed extension. Fire occurred in 1970 in the new extension causing considerable damage estimated then at 250,000. It was held that th

· contractors at the time of the fire had not in effect handed over to the employers, and that although the lessee was using part of the extension, it was the contractors responsibility to insure it until actual hand -over. As a result, the contractor was held to be liable to the employer for the damage caused to the parts used by the employer. It would be prudent therefore to include a term in this part of the clause clarifying the transfer of risk and the exact date when this formality is supposed to take place.