Complex projects such as HS2 are progressing at full speed, and joint venture activity is on the rise. But what if yours is falling foul of the law?
A joint venture (JV) wins a tender for a major infrastructure project. A prestigious contract; a boost for the partners. Who could blame them for celebrating?
But what if their joint venture insurance turned out to be inadequate in the face of a claim? It’s not an unrealistic scenario; appropriate cover is difficult to arrange without expert advice.
Celebrations would soon sour with the prospect of paying out an expensive claim that’s not insured for. Or, even worse, the possibility of criminal charges, if statutory insurance hasn’t been purchased.
What is a joint venture?
Simply, an arrangement whereby contractors and service providers team up to tender for projects. The reality, however, may be more complex. Their nature and composition can vary extensively, but they will often be arranged so the JV partners share profits and losses.
Commonly, the interests are set up as a 50/50 split, but this varies depending on the resources and expertise made available by each partner.
Dream team or nightmare scenario?
Two separate companies, pooling their resources for a common aim. What could possibly go wrong?
Plenty, which is why specific JV insurance cover could be vital if you don’t want to expose yourself to unnecessary risk.
There are many scenarios where you could find your cover wanting; you could even be on the wrong end of the law in certain circumstances. It is crucial to understand your statutory and contractual obligations
Insurance is required by law for the two following classes. If the correct cover isn’t in place, you could face fines, even if a claim never arises.
You can be fined £2,500 every day you are not properly insured. You may also be fined £1,000 if you do not display your employers’ liability certificate or refuse to make it available when asked by an inspector.
Third party insurance is the legal minimum required to drive a vehicle or registered plant on a road in the UK. Drivers can be fined up to £5,000 and lose up to eight points on your license if not properly insured.
While not compulsory by law, it is crucial that JV partners’ insurances dovetail effectively, and comply with their contract.
De-risk your JV
Discover how to procure effective JV insurance for you and your company. For all the questions you need to ask, read JLT’s white paper, Joint Ventures Insurance Considerations.
Points covered include:
• What you should consider when forming and insuring a JV
• How to select the insurance that’s right for you and your type of JV
• Options for structuring your JV insurances
• Insurance class considerations
• How your current insurer views JVs
For more information, please contact Dave Cahill, Business Development Leader on +44 (0)20 394 0389 or email firstname.lastname@example.org