PAI is the default insurance provision for public liability (PL) and contract works (CW) cover for both Maintenance Contracts and Capital Projects. The objective of PAI is to have all such contracts properly insured on a known basis with secure insurers at a competitive price.
PAI Insurance portal(external link)
All physical works contracts are required to come under the Transport Agency PAI for PL and CW where PAI is applicable.
Additionally, any contracts that may not be suitable for inclusion in the PAI programme may be suitable for CW and PL cover under a similar form of cover. Contracts that fall into this category should be discussed with the Transport Agency's Insurance team as they will need to be referred to the Underwriter to endorse the cover.
Contact the Insurance team at insurance@nzta.govt.nz
Professional indemnity (PI) insurance provides protection for businesses and professional persons in respect of legal liability arising from the conduct of their practice or business.
Some contract forms require the contractor to undertake design work. Where design work forms part of a contract under SM031 (eg D&C or ECI) the contractor will be required to take out PI insurance cover.
Further information can be found within section 1.8 of the Contract procedures manual (SM021) and within clause 8.6 of the Conditions of Contract of Contract proforma manual (SM031).
Public liability (PL) insurance is established to provide financial coverage to the insured where they are judged liable under common law for injury or damage sustained by a third party as a result of the insured’s breach of their duty of care. All physical works contracts require the Transport Agency to arrange public liability insurance cover.
Further information can be found within sections 1.8 and 1.9 of the Contract procedures manual (SM021) and within clause 8.5 of the Conditions of Contract of Contract proforma manual (SM031).
A contract works (CW) policy provides cover for sudden and accidental physical loss or damage that occurs to the works insured during the construction period. All physical works contracts require the Transport Agency to arrange contract works cover.
Further information can be found within section 1.9 of the Contract procedures manual (SM021) and within clause 8.3 or 8.8 of the Conditions of Contract of Contract proforma manual (SM031).
Some contracts require approval of the insurance level in accordance with sections 1.8 and 1.9 of the Contract procedures manual (SM021) prior to advertising of tender.
Templates XXIII Request for approval of insurance amounts contain the relevant insurance approval request forms.
The required and default level of physical works insurances can be found in sections A8, B4, C4 and H3 in the Contract proforma manual (SM031).
The project manager/contract manager is required to submit their insurance proposal for approval in accordance with the process outlined in sections 1.8 and 1.9 of the Contract procedures manual (SM021).
All contracts placed under SM031 require the contractor to take out motor vehicle, and plant equipment insurance.
Further information can be found within sections 1.8 and 1.9 of the Contract procedures manual (SM021) and within clause 8.4 or 8.5 of the Conditions of Contract of Contract proforma manual (SM031).
Contractors will be offered a choice in tender documents between the provision of retentions or a bond in lieu of retentions (BILR). Where a BILR is selected the contractor will establish through payment of a premium to a surety provider (usually a bank) a sum of money to be made available should the need for making good defective works be identified.
Further information can be found in sections 1.8 and 1.9 of the Contract procedures manual (SM021).
Note: In the event of financial default by any contractor please contact the Transport Agency's Chief Risk Assurance for further instruction.
As an alternative to establishing bonds and BILR for individual contracts, the Transport Agency has a facility for the provision of a global bond (GB). The GB facility is available for any contract with a tendered sum up to a value of $50M.
Contractors are required to determine their own GB amount, applying the formula as provided in section 1.9.13 of the Contract procedures manual (SM021).
Note: In the event of financial default by any contractor please contact the Transport Agency's Chief Risk Assurance for further instruction.
Further information can be found in section 1.9 of the Contract procedures manual (SM021).
For further information contact insurance@nzta.govt.nz.
