The risk protection arrangement (RPA) scheme, provided by the Department for Education in partnership with the Government Actuary’s Department, is an alternative to traditional insurance for schools and academies.
Established in 2014, it enables the government to cover risks instead of commercial insurers, with the aim of protecting schools and trusts against losses due to any unforeseen and unexpected events.
Technically, the RPA scheme isn’t an insurance scheme but a system set up to handle costs from risks using government funds. It helps schools and academies with coverage against risks without needing traditional insurance.
The coverage it provides includes losses for injuries at work, legal liabilities and damage to property. It’s designed to be affordable and straightforward for all types of educational organisations, including academy trusts, church academies, local authority maintained schools, voluntary aided schools and foundation special schools.
It has provided financial support to more than 300 schools that have suffered flood damage, while a risk mitigation service introduced in 2019 has provided funding to another 300 schools for installing crime prevention measures such as CCTV, secure fencing and fire doors.
Risk protection arrangement updates
However, schools and trusts need to be aware of in respect of cover available under section 1 (material damage) and section 2 (business interruption), which has an impact on any construction contracts that use the RPA scheme for coverage.
It’s worth citing the update in full as follows:
“RPA cover under section 1 (material damage) and section 2 (business interruption) does not apply to loss or damage to property (including contract works) where the member has entered into a contract with a third party that obliges the member to arrange insurance for the property on behalf of any third party or in joint names with the third party and/or arrange for a waiver of subrogation in favour of the third party under this RPA in relation to any damage the third party may cause to the property.”
What this essentially means is that if construction contracts aren’t amended to align with the cover available under the RPA scheme, there is a risk that the school would not be covered for some losses that could arise.
The small print
Standard forms of construction contracts, such as those published by the Joint Contracts Tribunal (JCT), often require the parties to take out insurance for the works in joint names.
Following the above clarification, though, the RPA scheme would likely not respond to claims relating to a building contract where the insured (ie, the school or trust) is obliged to take out insurance on behalf of the contractor or in joint names, as provided for under some options in unamended JCT contracts.
For example, under the JCT contract terms - in this instance clause 5 of the JCT minor works contract - the “employer” (this is the client, such as a school or trust) and contractor can nominate who is responsible for taking out required insurances with the following options available:
- 5.4 - Insurance of the works to be taken out by the contractor in joint names with the employer. This is often used where the works are for a new building.
- 5.5 - Insurance of the works and existing structures to be taken out by the employer in joint names with the contractor.
- 5.6 -The insurance of the works and existing structures to be taken out is to be set out in a separate insurance schedule (which will need to be identified in the contract particulars).
If clause 5.5 is selected, which is a common approach where works are carried out to refurbish or extend existing structures, there is a strong possibility the RPA scheme would not provide coverage as this provides for insurance in joint names and, in turn, there is a risk the school or trust would then be in breach of contractual obligations.
Educational organisations that are RPA scheme members must therefore review insurance obligations within their building contracts to check they are compliant and amend any future contracts to ensure compliance with insurance requirements.
The guidance updates published in the RPA rules highlight the importance of reviewing obligations set out in construction contracts.
In doing so, members of the RPA scheme can adapt the wording used in their construction contracts so they can continue to benefit from the protections offered by the RPA scheme, having comfort that their construction projects are appropriately protected.
Felicity Zakers is an associate in the education team at UK and Ireland law firm Browne Jacobson
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