Explain the obligation imposed on the contractor to indemnity the client through several

types of insurance under PAM 2006 standard form of contract.

INSURANCE
1) Insurance of work
Indemnity or security given by third party as a protection to the client and contractor for any
disaster during construction project. PAM Clause 20, CIDB Clause 38 Insurance of the works
falls into two categories: new works and work to existing structures. The form provides three
ways of insuring against the risk. The risks in PWD form include fire, lighting, explosion, storm,
tempest and flood risk.

2) Public Liability Insurance

Indemnity or security given by third party as a protection to the client and contractor if accident
happened after the public and public property on the construction site and around the site. The
risk of insure for civilian are authorize civilian to the construction site, Consultants, S.O and
S.O’s representative and civilian around the construction site. The risk of insure for property are
public property, vehicles, property of authorized person to the construction site., consultants, S.O
and S.O’s representative.

3) Workmen Compensation

Indemnity or security given by third party as a protection to the client and contractor if the
accident occurred on the construction site affect the contractor and subcontractor workers.
Workmen’s Compensation Act 1952 requires the contractor to insure against claims by their
employees arising out of and in the course of their employment. Note that public liability
insurance is different. It covers the contractor against claims by the public, but not for claims by
his worker.

4) SOCSO

Indemnity or security given by third party as a protection to the client and contractor if the
accident occurred on the construction site affect the contractor subcontractor workers. SOCSO is
the abbreviation for Social Security Organization. It is commonly known in the Malay term as
PERKESO or Pertubuhan Keselamatan Sosial. The Social Security Organization is an
organization set up to administer enforce and implement the Employees Social Security Act
1969 and the Employees Social Security (General) Regulations 1971.