Legal Analysis of WELCAR Policy

The necessity of exploration and development of oil and gas reserves in deep waters increased the demand for drafting complex insurance policies. This article aims to examine significant points of the most common policy form related to the construction in the oil industry’s offshore projects, called WELCAR, which is used in Iran.

This is an analytic and comparative study.

After providing an introduction about the construction projects, the first part of the paper introduces the policy by explaining its nature, subject matter, and importance. The second part, it identifies various assureds, considers the period of insurance coverage for any particular item or equipment, and analyzes the issue of defective part’s coverage. The effects of breach of the policy’s terms and conditions, plus the parties’ obligations, are discussed in the last part of this article.

Insurers’ concerns about some of the issues mentioned above, e.g., providing coverage for defective parts, led to the writing of some precise terms and conditions in their favor.