As distinct from engineering insurance, which began in England with the industrial revolution around the middle of the nineteenth century, the necessity to insure various aspects of a construction project during its period of construction was recognised when the standard forms of contract were developed. The earliest contractors’ all risks insurance requirement appeared in individual civil engineering contracts as early as 1929 for the construction of the Lambeth Bridge over the Thames in London. In Germany, this type of insurance was introduced in 1934 using terms and conditions derived from erection all risks insurance developed for erection and testing of industrial facilities, which had been launched in 1924.20 A standard form used in 1935 by the Electricity Supply Board of Ireland reads as follows:21
Clause 26-Insurance
The Contractor shall insure with a Company previously approved by the Board in writing such plant and materials as may for the time being be upon the site and shall keep them insured against destruction or damage for the whole value of such plant and materials until the completion of the works. And he shall, from time to time, when so required by the Engineer, produce the policy and the receipts for the premium for inspection. All monies received under such policies shall be applied in or towards the reconstruction or replacement of the plant and materials destroyed or damaged, but this provision shall not affect the Contractor’s liabilities under the Contract. The insurance requirement as set out in the aforementioned clause is limited to material and plant and it is not clear whether it was intended that the insurance should cease upon incorporation of the material in the works. After the Second World War, the responsibilities and liabilities of the contracting parties in construction contracts increased in extent and in value. Clients, who in many cases were banks and financial institutions, found it imperative to cover their liabilities through insurance. Hence, the 1st edition of the ICE form of contract, issued in 1945, highlighted the importance of insurance by incorporating clauses which remained in force until 1973 when the 5th edition was issued incorporating a revision of the insurance clauses.22 This revision of the clauses took place to allow for the developments which had occurred in the insurance markets of the world during the intervening period since 1945 and to cater for the technological advancement and the appearance of new construction materials and methods which emerged during this period. These developments created two effects: the first was that the new materials, methods and technology created new sets of risks and remedies which had to be recognised and allocated to one or more of the contracting parties; the second was that the insurers, on their part, varied their insurance policies in accordance with these developments, thus creating a significant difference between the requirements of the conditions of contract and what the insurance market was prepared to insure.
