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THE AMENDMENTS OF THE DECENNIAL POSTHUMOUS INSURANCE IN THE NEW CODE OF PUBLIC CONTRACTS

January 2018 - EU & Competition. Legal Developments by Villata, Degli Esposti e Associati.

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The Article n. 103 of the new Code of Public Contracts - Legislative Decree n. 50/2016, most recently amended by the Legislative Decree n. 56/2017 - provides assurances for the execution of the public contract - the so called final assurance -, issued by the contractor. In particular, paragraph 8 regulates the decennial posthumous insurance, also provided by the Art. 1669 of the Italian Civil Code.

The decennial posthumous insurance has partially different disciplines from those provided previously by the Art. 129 of the Legislative Decree n. 163/2006 - the previous Code of Public Contracts - and by the Art. 126 of the Decree of the President of the Republic n. 2017/2010.

In particular, the new Code of Public Contracts provides that the decennial posthumous insurance will be applied in the case of works with an amount more than double the European threshold, as stated by the Art. 35 of the Code - €10.450.000 -.  Otherwise, the previous Code has delegated to the Decree of 1 December 2000 of the Minister of Infrastructures to indicate the amount of works for which the abovementioned insurance is required. The mentioned Decree provided the amount of 10.000.000 SDR - Special Drawing Right, a form of international money, created by the International Monetary Fund, and defined as a weighted average of various convertible currencies- which is approximately €12.000.000; therefor it should be noted that the threshold provided for the obligation to contract the insurance have been lowered.

Paragraph 8 of Art. 103 Legislative Decree n. 50/2016 continues to assert providing that the executor of the work - who could be a person other than the contractor, for instance in case of transfer of receivables - has to contract the decennial posthumous insurance to cover risks of total or partial destruction of the work or the risks associated with serious structural defects.

The abovementioned insurance takes effects from the date of issue of the provisional acceptance certificate or of the regular execution certificate and, in any case, after 12 months from the completion of the works, as resulting from the certificate.

Regarding the content of the decennial posthumous insurance, it shall provide the payment of the compensation contractually agreed (as inserted by the Legislative Decree n. 56/2017) in favour of the purchaser as soon as the purchaser requires it, also during the assessment of liability without need for any authorizations or consents.

According to the principle of proportionality, the limit of the insurance compensation must be not less than 20% of the value of the work and not more than 40%, with regard to the nature of the work.

Furthermore, the executor has to contract another insurance policy of civil liability for damage caused to third parties, with a compensation amounting to 5% of the value of the work and with a minimum of €500.000 and a maximum of €5.000.000. This mentioned insurance takes effects from the date of issue of the provisional acceptance certificate or of the regular execution certificate and it is a ten-year agreement.

In addition, in the previous legislation, the Ministerial Decree n. 123/2004 provided a number of insurance scheme-types for each category of insurances (in particular, for the decennial posthumous insurance foreseen by the scheme-types 2.4). Today, according to the new Code and the abrogation of the scheme- type 2.4, regarding decennial posthumous insurance, it is no longer required to comply with a scheme-type. The insurers, faced with the problem of the adequacy of the policy to the  provisions of the legislator - who today does not provides any limits -, should comply with THE settled case-law in relation to the contractor obligations - according to the Art. 1669 of the Civil Code - utilising, where appropriate, the jurisprudential interpretation that emerged during the previous legislation.

In conclusion, the amendments made by the Legislative Decree n. 50/2016 concerning the decennial posthumous policy have brought together in a single article the protection for the Contracting Authority for possible damages suffered, directly or indirectly once the execution had been carried out, reducing the threshold provided for the obligation to contract the insurance and no longer foreseeing the obligation to comply with the scheme-types.