FIDIC Yellow Book – Item 1: Purpose
Explore why insurance exists in the contract and who benefits under 📘1999 Clause 18 and 📒2017 Clause 19.
Plain-English Purpose
Insurance is the project’s financial shock absorber. When something goes wrong—damage to the Works, third-party injury, worker harm, or a design mistake—the goal is that a pre-arranged policy responds, not a last-minute argument over who pays. These clauses make that response predictable and fundable.
- Risk allocation → financing: The contract allocates risk; insurance finances that allocation.
- Continuity of delivery: Claims money keeps the job moving toward Taking-Over and the Performance Certificate.
- Bankability: Lenders and sponsors look for clear evidence that key risks are insured with credible insurers.
Who carries what?
- 🧱 Works / Plant / Materials → Contractor places “all risks” in joint names with the Employer (1999 18; 2017 19.2.1).
- 🏗️ Contractor’s Equipment → Contractor (own name).
- 🛡️ Third-Party Liability (injury/property) → Contractor (1999 18.3; 2017 19.2.4).
- 👷 Injury to Employees (WC/EL) → Contractor (1999 18.4; 2017 19.2.5).
- 📐 Professional Indemnity (PI) for design duties → Explicit in 2017 19.2.3 (retroactive date + run-off).
“Joint names” aligns interests and eases claims; add cross-liability and waiver of subrogation to avoid avoidable declinatures.
Why did the 📒2017 edition sharpen things?
- Design-build reality: 2017 calls out PI (19.2.3)—all-risks property cover won’t fix design defects; PI will (subject to wording).
- Supply chain gaps: Explicit Goods off-Site/in transit cover (19.2.2) closes a common blind spot.
- Operational hygiene: Stronger General Requirements (19.1): evidence before access to Site, cancellation notices, Employer step-in if cover lapses.
Employer — benefits 🎯
- Protection of the Works value and schedule continuity.
- PI backstops design risk (2017), improving bankability.
- Joint names simplifies recovery and reduces disputes.
Contractor — benefits 🧭
- Clear minimum covers, deductibles, and time windows.
- Predictable claims routing; fewer uninsured surprises.
- Stronger frameworks to satisfy financiers and the Engineer.
Shared risks ⚠️
- Missing endorsements ⇒ “insured but not covered.”
- Lapses at Taking-Over/DNP ⇒ gaps just when defects emerge.
- Misaligned policy limits vs. contract caps (1999 17.6 / 2017 1.15).
Quick Visual — “Who Insures What?”
| Topic | 1999 (Clause 18) | 2017 (Clause 19) |
|---|---|---|
| Works / Plant / Materials | Contractor (joint names) | Contractor (joint names) — 19.2.1 |
| Contractor’s Equipment | Contractor (own name) | Contractor (own name) |
| Third-Party Liability | Contractor — 18.3 | Contractor — 19.2.4 |
| Employees’ Injury (WC/EL) | Contractor — 18.4 | Contractor — 19.2.5 |
| Professional Indemnity (Design) | Not expressly stated | Explicit — 19.2.3 |
Use Particular Conditions to pin down limits, deductibles, endorsements, and PI run-off.
FIDIC Yellow Book – Item 2: Breakdown of the Clause
Drill into sub-clauses for 📘1999 Clause 18 and 📒2017 Clause 19 with expandable details and a side-by-side view.
**18.1** General Requirements for Insurances
Obligation: Contractor must effect and maintain agreed insurances with acceptable insurers and provide evidence before commencement and on renewal.
- Evidence & timing: Certificates/policies provided prior to Site access; updates at each renewal.
- Joint names: Where Employer has an insurable interest (e.g., Works), policies are in joint names.
- Deductibles: Usually Contractor’s responsibility unless Particular Conditions say otherwise.
- Failure to insure: Employer may procure cover and recover Cost from Contractor (step-in concept).
- Quality of insurers: “Acceptable” to Employer/Engineer—state ratings in Particular Conditions.
**18.2** Insurance for Works & Contractor’s Equipment
- Works/Plant/Materials (all risks): Insured at full replacement value, typically covering loss/damage from delivery to Site through testing/commissioning and up to Taking-Over. Includes cover for remedial works during the DNP.
- Testing/commissioning: Ensure hot & cold testing are not excluded; state any sub-limits.
- Contractor’s Equipment: Insured by the Contractor (usually not joint names) for loss/damage; consequential delay is typically excluded.
- Automatic reinstatement: After a claim, sum insured should reinstate—specify in PCs.
**18.3** Insurance against Injury to Persons & Damage to Property (TPL)
- Scope: Third-party bodily injury and property damage arising from execution of the Works (excludes damage to the Works themselves).
- Limits: Set per occurrence and, if applicable, aggregate in Contract Data / PCs.
- Endorsements: Add separation of insureds (cross-liability) and waiver of subrogation among joint insureds.
- Interfaces: Motor/aviation risks may require separate statutory policies depending on jurisdiction.
**18.4** Insurance for Contractor’s Personnel
- Statutory cover: Workers’ compensation/employers’ liability per local law and good practice.
- Subcontractors: Confirm their compliance and flow-down obligations.
- Territory/jurisdiction: Match where employees are engaged and where claims might arise.
**19.1** General Requirements
- Evidence & timing: Proof of insurance before access to Site; copies at renewal.
- Cancellation/material change: Insurer to give the Employer notice (e.g., 30 days)—state in PCs.
- Deductibles control: Identify who bears them (usually Contractor); cap maximum without Employer approval.
- Step-in: Employer can place insurance if Contractor fails and recover Cost.
- Insurer quality: Set minimum financial strength (ratings or market standards) in Contract Data.
**19.2.1** The Works (All Risks)
- Cover: Works/Plant/Materials at replacement value in joint names, including testing/commissioning.
- Duration: From delivery to Site through Taking-Over; includes remedial works during the DNP.
- Add-ons: Debris removal, professional fees, escalation; automatic reinstatement after claims.
**19.2.2** Goods (Off-Site / In Transit / Storage)
- Gap-closer: Explicit cover for off-Site goods and logistics, a common blind spot in 1999 practice.
- Trigger points: Clarify attachment points (EXW/FOB/CIF) and who insures pre-delivery.
- Evidence: Certificates required before shipment or release from storage.
**19.2.3** Liability for Breach of Professional Duty (PI)
- Design risk: Dedicated PI for design errors/omissions—property policies won’t fix defective design.
- Claims-made: Set a retroactive date (≤ design start) and run-off period (commonly 5–10 years after the Performance Certificate) in the Contract Data.
- Limits: Define per claim & aggregate; specify territory/jurisdiction and key exclusions (e.g., fitness for purpose if required).
**19.2.4** Injury to Persons & Damage to Property (TPL)
- Scope: Third-party bodily injury and property damage arising from the Works (not the Works themselves).
- Endorsements: Separation of insureds (cross-liability), waiver of subrogation among joint insureds.
- Limits: Per occurrence + aggregate; consider products/completed operations where relevant.
**19.2.5** Injury to Employees (WC/EL)
- Statutory compliance: Workers’ compensation/employers’ liability per local laws.
- Flow-down: Ensure subcontractors maintain equivalent cover; collect certificates.
**19.2.6** Other Insurances required by Laws/Practice
- Catch-all: Motor, marine, aviation, environmental impairment, or other statutory schemes as applicable.
- Documentation: Provide evidence prior to relevant activity (e.g., road transport, flight, shipment).
| Topic | 1999 (Clause 18) | 2017 (Clause 19) |
|---|---|---|
| General Requirements | 18.1: evidence before commencement; joint names; deductibles; Employer step-in if Contractor fails. | 19.1: tighter evidence; cancellation/material change notices; deductibles control; explicit step-in; insurer quality. |
| Works / Plant / Materials | 18.2: all risks, replacement value, testing/commissioning, remedial DNP; joint names. | 19.2.1: similar scope; clarifies testing/commissioning and remedial DNP within joint-name cover. |
| Goods (Off-Site / Transit / Storage) | Handled via practice/PCs; potential blind spots. | 19.2.2: explicit requirement; clarifies attachment points and evidence before shipment. |
| Professional Indemnity (Design) | Not expressly called out in Clause 18. | 19.2.3: explicit PI (claims-made) with retro date + run-off set in Contract Data. |
| TPL (Third-Party Liability) | 18.3: injury/property damage to third parties; set limits; add cross-liability. | 19.2.4: same core risk with modern endorsements spelled out in practice. |
| Employees (WC/EL) | 18.4: statutory cover; ensure subcontractor compliance. | 19.2.5: similar; emphasises documentation and flow-down. |
| Other Insurances | By law / Particular Conditions. | 19.2.6: explicit “as required by Laws & local practice.” |
Remember to align policy limits with Limitation of Liability (1999 17.6; 2017 1.15), and keep claim notices within policy terms and FIDIC’s **28 days** discipline.
FIDIC Yellow Book – Item 3: Key Interpretations & Implications
Deep dive into how insurance clauses work in practice: joint names, coverage windows, deductibles, PI as claims-made, step-in rights, and more—across 📘1999 Clause 18 and 📒2017 Clause 19.
Joint Names & Cross-Liability
Interpretation: For the Works policy, name Employer + Contractor in joint names to align interests and smooth claims. Add separation of insureds (cross-liability) on TPL so one insured’s claim against another is treated like any third-party claim.
Coverage Windows (Mind the Edges)
- Works: Delivery to Site → testing/commissioning → Taking-Over; includes remedial works during DNP.
- PI (2017 19.2.3): Claims-made. Needs a retroactive date ≤ design start + run-off (often 5–10 years after Performance Certificate).
Deductibles Strategy
Deductibles usually sit with the Contractor unless Particular Conditions shift them. Higher deductibles → lower premium but higher retained risk. Cap maximum per event and price the delta if the Employer wants lower deductibles.
Employer Step-In
If the Contractor fails to insure, the Employer may procure cover and recover Cost. 2017 19.1 gives stronger operational teeth (e.g., cancellation notice expectations).
Policy Limits vs. Contract Caps
Align insurance limits with Limitation of Liability (1999 17.6; 2017 1.15) so you’re not “insured but unrecoverable.” Decide deliberately if limits sit at, below, or above the cap.
Claims Timing Discipline
Insurance policies often require prompt notice. FIDIC claims usually require notice within 28 days. Do both: log insurer notice within 24–48h and issue FIDIC Notice within 28 days.
Design-Build Reality → PI is Explicit
Property “all risks” won’t fix defective design. 2017 adds 19.2.3 (PI) to directly fund design negligence—retro date + run-off specified in Contract Data.
Logistics Blind Spots → Goods Clarified
Off-Site/in transit/storage risks are explicitly captured by 19.2.2. Clarify attachment points (EXW/FOB/CIF) and evidence of cover before shipment.
Operational Hygiene → Evidence & Notices
19.1 expects proof of cover before access to Site, insurer cancellation/material-change notices (e.g., 30 days), and enables Employer step-in if cover lapses.
Risk → Policy → Contract Remedy
| Risk | Primary Policy Response | FIDIC Contract Angle |
|---|---|---|
| Fire damages the Works during testing | Works (all risks) in joint names | Care of the Works (Clause 17); EOT possibly; Cost depends on cause & allocation |
| Design error requires rework | PI (2017 19.2.3) subject to wording | Claim under Clause 20; ensure 28 days notice discipline |
| Public injury from site activity | TPL with separation of insureds | Indemnities under Clause 17; statutory duties apply |
| Goods damaged in port storage | Goods cover (2017 19.2.2) | Coordinate Incoterms; evidence before shipment |
Tip: policy recovery and FIDIC remedies can run in parallel—avoid double recovery but don’t stall contract claims while the insurer adjusts.
Endorsements & Settings Checklist
Tick what you plan to require in Particular Conditions (PCs). Then copy the list.
Goods risk pre-delivery & Incoterms
Spell out when cover attaches (EXW/FOB/CIF). Under 2017 19.2.2, require evidence before shipment and name who insures while in third-party custody.
Hot works / testing sub-limits
Many property forms sub-limit hot testing. State realistic sub-limits and ensure they match the commissioning profile; avoid a mid-test coverage surprise.
Subcontractor design PI
If design is split, require downstream PI or inclusion as named insureds; ensure retro date consistency to avoid gaps in multi-party design delivery.
Local law overlays
Some jurisdictions mandate specific wordings (motor/aviation/marine cargo). Use 19.2.6 (2017) to catch these and avoid non-compliance.
“Can it be interpreted that…?”
…the Employer must share deductibles on joint-name Works claims?
…the Works policy covers fixing defective design?
…we can rely on insurer to notify us before cancellation?
…policy notice can be sent after the FIDIC claim timeline?
PI Run-Off Planner
Enter your Performance Certificate date and desired run-off period to calculate the PI expiry target.
FIDIC Yellow Book – Item 4: Cross-Referencing with Other Clauses
See how Insurance interacts with Care of the Works, Exceptional Events/Force Majeure, Claims, and Liability caps across 📘1999 and 📒2017.
1999 Clause 17 — Care of the Works & Employer’s Risks
- Care & risk: Contractor bears risk for the Works up to Taking-Over; specific Employer’s risks carved out.
- Insurance hook: Loss/damage to the Works is financially backstopped by the **Clause 18** Works policy (joint names) where covered.
- Practical: Keep Works cover active during remedial works in the DNP; confirm automatic reinstatement after claims.
1999 Clause 18 — Insurance (Works, TPL, Personnel)
- 18.1 General: Evidence before commencement; joint names where Employer has an interest; deductibles usually Contractor’s.
- 18.2 Works & Equipment: All risks (replacement value); includes testing/commissioning; Contractor’s Equipment insured by Contractor.
- 18.3 TPL: Third-party injury/property damage; set limits/aggregate; add cross-liability and waiver of subrogation.
- 18.4 Personnel: Workers’ comp / employers’ liability per law/practice.
1999 Clause 19 — Force Majeure
- Interplay: Events may be insurable (e.g., natural catastrophe). You can have both an insurance claim and a contract claim for **EOT** (and sometimes Cost).
- Action: Notify the insurer promptly and issue FIDIC Notice within 28 days under **Clause 20.1**.
1999 Clause 20.1 — Contractor’s Claims
- Notice: Serve within 28 days of becoming aware (or should have become aware).
- Coordination: Policy notice conditions can be shorter—meet both clocks to protect recovery.
1999 Clause 17.6 — Limitation of Liability
- Alignment: Set policy limits/aggregates to match caps where sensible—avoid “insured but unrecoverable.”
2017 Clause 17 — Risk Allocation & Indemnities
- Care of the Works: Contractor bears risk to Taking-Over; Employer’s risks carved out.
- Insurance hook: Loss/damage routes to **Clause 19** Works policy where covered; indemnities align with TPL.
2017 Clause 18 — Exceptional Events
- Interplay: Similar function to 1999 Force Majeure; events may be insurable; claims and policy recovery can run in parallel.
2017 Clause 19 — Insurance (Works, Goods, PI, TPL, Employees)
- 19.1 General: Evidence before Site access; cancellation/material-change notices; Employer step-in; deductibles control.
- 19.2.1 Works: All risks (joint names) incl. testing/commissioning and remedial DNP works.
- 19.2.2 Goods: Off-Site/in transit/storage—evidence before shipment.
- 19.2.3 PI: Design duty (claims-made) with retro date + run-off set in Contract Data.
- 19.2.4 TPL / 19.2.5 Employees / 19.2.6 Other: Liability and statutory covers.
2017 Clause 20 — Claims
- Notice: Serve within 28 days; thereafter submit the full particulars per the 2017 process.
- Policy tie-in: Meet insurer’s prompt notice + FIDIC clock to avoid prejudice.
2017 Clause 1.15 — Limitation of Liability
- Centralized caps: Align policy limits/aggregates; be explicit about carve-outs (e.g., fraud/wilful misconduct) vs. insurability.
| Topic | 1999 (Key Clause) | 2017 (Key Clause) | Insurance Hook |
|---|---|---|---|
| Care of the Works | 17 (care & Employer’s risks) | 17 (risk & indemnities) | Works policy (joint names) funds physical loss/damage; remedial DNP covered. |
| Exceptional/Force Majeure | 19 (Force Majeure) | 18 (Exceptional Events) | Event may be insurable; still pursue EOT/Cost per contract. |
| Claims & Time Bars | 20.1 — Notice in 28 days | 20 — Notice in 28 days | Meet policy notice (often immediate) + FIDIC **28 days**. |
| Limitation of Liability | 17.6 (caps in Clause 17) | 1.15 (centralized cap) | Align limits/aggregates; know carve-outs vs. insurability. |
| Design Risk (PI) | Not expressly in 18 | 19.2.3 (explicit PI; retro + run-off) | PI responds where all-risks excludes defective design. |
Matrix tip: insurance recovery and contractual remedies can run in parallel—avoid double recovery but don’t delay one for the other.
⏱️ Claims & Insurance Clock
Calculate the FIDIC Notice of Claim deadline (**28 days**) and set a target for insurer notice (best practice: ASAP, e.g., ≤ 48 hours).
🔎 Global Search Across Cards
Use the filter above to highlight relevant cross-refs in either edition.
FIDIC Yellow Book – Item 5: What-If Scenarios
Test real-world events and see which policy responds, what to notify, and where 📘1999 Clause 18 / 📒2017 Clause 19 connect to Claims, Risk and Liability.
🪜 Scenario A — Crane topple during a test lift
Likely Policy Response
- Works (all risks) — joint names, for damage to the Works/Plant/Materials (1999 18.2; 2017 19.2.1).
- TPL — injury/property to third parties (1999 18.3; 2017 19.2.4).
FIDIC Hooks
- Care of the Works (1999 17; 2017 17).
- Claims: Notice within 28 days (1999 20.1; 2017 20).
- Possible EOT under Force Majeure/Exceptional Events (1999 19; 2017 18).
Actions
- Make safe; preserve evidence; notify insurer (≤ 48h target).
- Issue FIDIC Notice within 28 days.
- Log deductibles; consider debris removal & reinstatement sums.
📐 Scenario B — Foundation settlement due to design error
Likely Policy Response
- PI (claims-made) for breach of professional duty (2017 19.2.3).
- Works policy usually excludes rectifying defective design itself.
FIDIC Hooks
- Claims within 28 days (1999 20.1; 2017 20).
- Risk & Indemnities (1999 17; 2017 17).
Actions
- Notify PI insurer quickly; confirm coverage triggers (design dates).
- Issue FIDIC Notice in 28 days; prepare detailed cause analysis.
- Coordinate redesign and cost segregation (betterment vs reinstatement).
🔥 Scenario C — Fire after Taking-Over during DNP remedial works
Likely Policy Response
- Works (all risks) for the portion under Contractor’s remedial works during the DNP (1999 18.2; 2017 19.2.1).
- Employer’s operational program may apply to areas fully handed over.
FIDIC Hooks
- Care of the Works around DNP boundaries (1999 17; 2017 17).
- Claims in 28 days (1999 20.1; 2017 20).
Actions
- Map which areas were under remedial works.
- Notify insurers; confirm sum reinstatement and debris/removal cover.
- Align contract and policy claims to avoid double recovery issues.
📦 Scenario D — Goods damaged in port storage before shipment
Likely Policy Response
- Goods insurance off-Site/in transit/storage (2017 19.2.2).
- Under 1999, often addressed via PCs or cargo insurance practice—watch gaps.
FIDIC Hooks
- Evidence before shipment (2017 19.2.2).
- Claims within 28 days (1999 20.1; 2017 20).
Actions
- Check Incoterms handoff (EXW/FOB/CIF) to confirm who insured risk.
- Gather warehouse receipts, survey reports, and packing lists.
- Notify insurer + FIDIC Notice in 28 days.
⛔ Scenario E — Policy lapsed unnoticed
Likely Contract Response
- Employer may step-in to procure cover and recover Cost (2017 19.1; 1999 practice via 18.1).
Controls
- Shared insurance register with renewals and endorsements.
- Brokers’ certificates; verify retro/run-off for PI.
Actions
- Immediate reinstatement; document continuity letters where possible.
- Notify stakeholders; review deductibles and limits at renewal.
🧩 Scenario F — Subcontractor design causes rework
Likely Policy Response
- Main contractor’s PI if subcontractor is included/named (2017 19.2.3), or subcontractor’s own PI.
- Works policy still excludes fixing defective design itself.
FIDIC Hooks
- Claims in 28 days (1999 20.1; 2017 20).
- Risk & Indemnities (1999 17; 2017 17).
Actions
- Check downstream PI: limits, retro dates, and jurisdiction.
- Align notice to both main and sub’s insurers.
🧭 Which policy responds?
Reminder: serve insurer notice promptly and FIDIC Notice within 28 days (1999 20.1; 2017 20).
🧮 Deductible Impact Estimator
Compare two deductible options and estimate annual retained cost.
⏱️ Notice Deadlines Helper
Get FIDIC Notice (28 days) and insurer notice target (e.g., ≤ 48h).
🚢 Incoterms Risk Handoff (Goods Insurance)
Who carries the risk (and likely the insurance) at each point?
Cross-check with 2017 19.2.2 for evidence of cover before shipment.
🗒️ Practical Notes & Drafting Tips
- Specify joint names, separation of insureds, and waiver of subrogation to avoid declinatures (1999 18.2/18.3; 2017 19.2.1/19.2.4).
- Align policy limits with Limitation of Liability (1999 17.6; 2017 1.15).
- Keep PI retro date ≤ design start and run-off 5–10 years (2017 19.2.3).
- Set insurer 30-day cancellation/material-change notices and Employer step-in (2017 19.1 ethos).
- Serve insurer notice promptly and FIDIC Notice within 28 days (1999 20.1; 2017 20).
FIDIC Yellow Book – Item 6: Suggestions for Clarity & Improvement
Build high-clarity Particular Conditions for insurance: limits, endorsements, timelines, PI run-off, Goods cover, notices, and alignment with caps.
General Requirements (📘 **18.1** / 📒 **19.1**)
Tip: Keep evidence at renewals and list required endorsements in certificates.
Works / Plant / Materials (📘 **18.2** / 📒 **19.2.1**)
Goods off-Site / Transit / Storage (📒 **19.2.2**)
Third-Party Liability (📘 **18.3** / 📒 **19.2.4**)
Injury to Employees (📘 **18.4** / 📒 **19.2.5**)
Professional Indemnity – design duty (📒 **19.2.3**)
PI is claims-made. Keep retro ≤ design start; maintain run-off after the Performance Certificate.
Other Insurances (📒 **19.2.6**)
Pick endorsements & conditions to insert verbatim
Commonly ambiguous phrases → stronger wording
“Adequate insurance”
“Until completion”
“Notify promptly”
“Design covered”
“Goods are insured”
Golden-Principles sense-check (tick to include)
Align policy limits with caps (📘 **17.6** / 📒 **1.15**)
Note: insurers pay per policy; contractual recovery between Parties may still be capped—decide deliberately.
Your PCs Draft
This is editorial guidance, not legal advice. Keep the **28 days** claim discipline and insurer notice in sync.
FIDIC Yellow Book – Sample Letters Generator
Pick a scenario tied to 📘1999 Clause 18 / 📒2017 Clause 19 and generate a polished letter.
Clause refs auto-inserted where relevant (e.g., **28 days**, 📘 **18**, 📒 **19**).