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Insurance Coverages and Descriptions  Chapter 2 – provides information relative to general requirements pertaining to all forms of insurance as well as.

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Presentation on theme: "Insurance Coverages and Descriptions  Chapter 2 – provides information relative to general requirements pertaining to all forms of insurance as well as."— Presentation transcript:

1 Insurance Coverages and Descriptions  Chapter 2 – provides information relative to general requirements pertaining to all forms of insurance as well as information that is specific to individual lines of coverage.  Page 5 of the Manual

2 General Requirements A.M. Best Rating a. measure of the financial strength and ability of an insurance carrier to meets its obligations. b. A- or better. c. See for individual carrier ratings.www.ambest.com

3 Admitted carriers  Licensed to do business in NY  Policy forms have been approved by Insurance Dept  Covered by insolvency fund in case Carrier becomes insolvent

4 General Requirements Non- Admitted Carriers a. Non-admitted carriers are not licensed to do business in NYS, but that doesn’t make it illegal to place insurance. b. Affidavit by Producing Broker – attests that agent/broker sought, but was unable to place, coverage with an admitted carrier

5 General Requirements Notice of Cancellation d. Notice that your contractor is losing his/her insurance. e. Carrier may not deny coverage to you unless they send notice. f. Carrier doesn’t want to assume obligation of providing free insurance.

6 Recent changes to the ACORD form  Responses from insurance agents and brokers  What are we really asking for?

7 Primary and Non-Contributory Coverage  What does this mean? – The State is covered and we do not pay.

8 General Requirements Waiver of Subrogation g. Commonly beneficial where one party is required to have property insurance

9 Other Provisions  Remedies – Stop work – Surety

10 Subcontractors  “Shall endeavor”  What is the nature of the subcontractor’s work?

11 Deductibles and Self-Insured Retentions (aka SIR’s)  What’s the difference?  Why do we need that information?  What to do once you have that information

12 Self-insurance/high deductibles  Most large contractors retain all or a portion of the loss exposure through self-insurance (i.e., no insurance).  Question of financial responsibility.  Question of providing protection for claims against agency.

13 Deductibles and Self-Insured Retentions (aka SIR’s)  What’s the difference?  Why do we need that information?  What to do once you have that information

14 Occurrence versus Claims-Made policies  Some policies typically only come on a claims-made form  Why does the agency need coverage after the work is done?  What if a claims-made policy is cancelled or non-renewed?

15 Chapter 2 – Manual Insurance Types Refer to Page 4 – Manual READ THIS DOCUMENT

16 Select Kinds of Insurance You Need SPECIFIC COVERAGES CH 2  Commercial General Liability  Workers’ Compensation and Disability  EVERYBODY THAT EMPLOYS WORKERS  Business Auto  Railroad protective/ Environmental/ Marine  Environmental / Pollution Liability  Builders’ Risk  Owners & Contractors Protective  Professional Liability Disclaimer Disclaimer

17 Select the Kinds of Insurance  Crime  Marine Protection and Indemnity  Garage Liability  Umbrella and Excess Liability  FAMILIARIZE YOURSELF WITH THE CONTENTS OF THE SECTION

18 Types of Insurance Commercial General Liability (CGL)  PAGE 8 – 11 Description  Most Common business coverage – 90% exposures.  Loss that an insured “becomes legally obligated to pay” (usually negligence).  Covers liability assumed by contract in most cases.  Coverage for “completed operations.”  Limited coverage for property exposures.  Considers certain exposures are covered by more specific policies.

19 Types of Insurance Workers’ Compensation and Disability  Page 11 Description  Required by State Finance Law section 142.  All contractors should have this (exceptions).  Work near navigable water see 11 – Marine Protect and Indem. Jones Act.

20 Types of Insurance Commercial Automobile Policy  Page 12 Description  Covers liability of registered cars and trucks resulting from business use.  Required anytime that the contracted activity requires a vehicle to enter agency property.  Environmental exposures covered by endorsement.

21 Types of Insurance Excess (umbrella) Liability Insurance Policy  Page 18 DECRIPTION  Excess over CGL and Auto.  $1 million doesn’t buy what it once did.  Premium is about 25% of CGL premium for up to $5 million.

22 Types of Insurance Owners & Contractors Protective Liability Policy (OCP) (Highway / Gen. Bldg)  Page 16 Description  Protects the owner and contractor for liability exposures from negligent acts.  Policy bought for Public Entity.  Site specific.  Finger pointing less likely with at least some contractor involvement.  Provides primary coverage

23 Types of Insurance Owners & Contractors Protective Liability Policy (OCP)  Expensive coverage for small projects.  Duplicate coverage where claim stems from contractor work or operations.  Duplicate coverage where contractor is negligent.  Less of a gray area for general supervision and site conditions.  Less costly on big jobs where same carrier writes the CGL.

24 Types of Insurance Builders’ Risk  Page 16  Covers physical damage to buildings in the course of construction.  Must be written on a completed value form.  The amount of the insurance must be the anticipated full value of the completed building.

25 Types of Insurance Professional Liability- Errors & Omissions  Page 17  Covers liability for the failure to use the degree of skill expected of a person in a particular field.  Professional Liability coverage is required whenever any part of the contracted activity requires the services of a professional consultant.

26 Suggestions  READ THE MANUAL – There is no movie version. – Become familiar with the contents – Become familiar with information layout  Review EXHIBIT “E” manual – Policy Samples – List what the policy covers – List policy exclusions ( better covered elsewhere ) – List policies you would think are required.  Review requirements of past or similar procurements. (similar contracts available online)

27 Suggestions - continued  Review Ch - 2 and Ch 3 MANUAL  Develop an insurance specification with your legal advisor or risk manager before getting bids or quotes. (CH 3 Model Language)  Present specifications in procurement.  Always assure that you are using a good indemnity clause.  Consider common sense limits that you will require for each contract type.

28 Select Limits that Fit the Contract  Use the Matrix.  Bigger projects carry greater risk.  Higher limits for big contract value.

29 Matrix Pages

30

31

32 Case Studies

33 Issues With Contracting  Types of coverage.  Limits of Liability.  Required endorsements.

34 Thruway Bridge Replacement  Replacement of existing mainline bridge  Bridge spans existing commuter RR tracks  Project will encroach upon exiting fiber optic cable line  Construction cost expected to be $11.0M

35 Types of Coverage: In addition to the standard General and Auto Liability, Workers’ Compensation, NYS Disability, the contract should also require Builders’ Risk, Owners’ & Contractors’ Protective Liability and possibly Environmental Liability coverage. Contract should also require Contractor’s Equipment coverage for environmental exposures. Railroad Protective Liability (RRPL) coverage will be required as this project will be performed on RR ROW.

36 Limits of Liability: General Liability – $5,000,000/$5,000,000 Umbrella (Excess) Liability – As needed to meet CGL limit requirements Auto Liability – $1,000,000 Combined Single Limit Environmental Liability - $5,000,000? OCP - $1,000,000/$2,000,000 Builders’ Risk - $11,000,000 RRPL – Limits as required by the RR Workers’ Compensation – Limits as specified by law NYS Disability – Limits as specified by law

37 Required Endorsements: Deletion of the explosion, collapse and underground hazards (XCU) exclusion (from CGL). Deletion of Railroad 50 ft. Exclusion (from CGL) Additional Insureds – Thruway Authority (Agency) Per Project Aggregate to the CGL MCS-90 is required on Auto Liability coverage because the contractor may be hauling contaminated soil from the site ISO Broadened Pollution Liability Coverage for Covered Autos (CA9948)

38 Information Technology Services Install/Update Information Systems

39 Need for IT Services  Install or Update for modernization or new feature(s)  In-house IT may lack certification/experience in new software feature  Agency seeking fully certified specialist in the particular product(s)  Product(s) or update(s) may be proprietary

40 Issues With Contracting  Types of coverage.  Limits of Liability.  Required endorsements.

41 RFP, IFB Requirements May state specific product(s) to be installed or modernized Independent Contractor status of expert vendor May restrict use of subcontractors Subcontractor use subject to agency approval Ownership of non-proprietary work product MWBE policy may encourage proposals from small firms with minimum threshold of experience. Anticipated annual value of contract

42 Considerations General Liability – Limitations relating to contracts Errors & Omissions coverage – Individual or Entity Coverage Nondisclosure agreements; agency and client data, CI access – Exceptions to privacy in contested matters – Scope of exceptions Work Location(s) and Travel – Minimal coverage for company cars and POVs Crime Insurance – Willful violation of professional standards – Identity Theft Insurance as rider or separate policy – Cloud Computing Issues Small Business Considerations – Availability and Affordability

43 Tip Top Towers  Demolition and construction of a 3-story residential healthcare facility.  Includes excavation and removal of contaminated soil below the existing structure.  The general contractor employs a registered architect who will design the structure.  The project has a not-to-exceed design budget of $495,000 and a not-to-exceed construction budget of $8.06M.

44 Issues With Contracting  Types of coverage.  Limits of Liability.  Required endorsements.

45 Types of Coverage: In addition to the standard General Liability, Workers’ Compensation, NYS Disability and Auto, the contract should also require Environmental Liability, Builders’ Risk, Professional Liability. Owners’ & Contractors’ Protective may be required, depending on the Agency involved. Contract should also mention Contractor’s Equipment coverage. Limits of Liability: General Liability – $2,000,000 Workers’ Compensation – Unlimited, by law NYS Disability – As specified by law Auto Liability – $1,000,000 Environmental Liability - $2,000,000 Builders’ Risk – $8,060,000 Professional Liability - $2,000,000 OCP - $1,000,000/$2,000,000

46 Endorsements: MCS-90 is required on Auto Liability coverage because the contractor will be hauling contaminated soil from the site.

47 Professional Services Outside Counsel for Administrative Boards and Appeals

48 Need for Outside Counsel Agencies frequently require legal services to represent employers before administrative boards and for appeals of administrative decisions. Outside Counsel may be needed for Unemployment, Workers’ Compensation, Disability, Human Rights Law, Employment Law, or where conflict of interest may exist for in-house counsel. Consider the type of firm (sole practitioner, partnership, professional corporation, limited liability entity).

49 Issues With Contracting  Types of coverage.  Limits of Liability.  Required endorsements.

50 RFP, IFB Requirements  Represent employers before Administrative Boards and Courts.  Counsel as Independent Contractor.  Retaining Attorney(s), not subcontractors.  Subcontractor use subject to agency approval  MWBE policy may encourage proposals from small firms with minimum threshold of experience.

51 Considerations Compare Professional Liability and Errors & Omissions coverage – Individual or Entity Coverage Nondisclosure agreements; agency and client data, CI access – Exceptions to privacy in contested matters – Scope of exceptions Work Location(s) and Travel – Minimal coverage for company cars and POVs Crime Insurance – Willful violation of professional standards – Identity Theft Insurance as rider or separate policy General Liability – Limitations relating to contracts Small Business Considerations – Availability and Affordability

52 Shaky Movers  Solicitation for moving services including planning and preparation, moving, disassembly, assembly, and other general activities related to relocation of tenant agencies.  Insurance requirements were attached to the solicitation.

53 Issues With Contracting  Types of coverage.  Limits of Liability.  Required endorsements.

54 Contract Administration  Before work begins.  During the course of the work, documents should be monitored for renewal/expiration dates.  If not maintained or is cancelled. Follow internal procedures to notify the necessary departments/individuals.  How long do you have to keep insurance records? Consult with your agency regarding its records retention policies.

55 Insist Upon Proof of Insurance  Nobody starts work until there is compliance proven.  Decide on type of proof- certificate.  Proof must match contract requirements.

56 Certificates of Insurance  ACORD and individual carrier forms  Workers’ Compensation and NYS Disability forms  Original documents – your agency needs to decide  The “Named Insured” – it needs to match the name on the contract  A signed document

57 Additional Insureds –  must be referenced on the certificate and in the contract  The written contractual obligation  Be sure the Certificate includes the contract (and project) number as applicable  The Supplemental Insurance Certificate – we’ll discuss this later in the presentation

58 Model Insurance Requirements Additional Insured Protection  In case you get sued because of the contractor’s work.  Need to be endorsed to policy.  Auto and general liability risks.

59 ACORD Certificate of Insurance  Association for Cooperative Operations Research and Development.  The insurance industry's nonprofit standards developer.  Check types of insurance, limits, expiration date and that you are named as certificate holder.  Additional insured endorsement is a separate form.  Use of questionnaire or different form (high volume) are alternatives but no certificate will create coverage.

60 Workers’ Comp. & Disability Certificates  NY Workers’ Compensation Board requires that separate certificate be used.  Workers’ Compensation Law Section 57 requires public agency to collect proof of coverage.  Disability insurance is also required.  Construction contractors will not be exempt.  Out-of-state vendors will be exempt.

61 Supplemental Insurance Questionnaire

62 Does your contractor have necessary insurance?

63 The Glossary  Not an all encompassing document – but we hope it helps.  Includes terms that are frequently encountered in insurance-related discussions or reading. Terms are not limited to those used in this manual.  Not the only source of information  Many electronic sources  Don’t forget that the Council of Contracting Agencies Insurance Committee is also a source of information!

64 The Exhibits  Certificate of Insurance forms  The Supplemental Insurance Certificate  NOT intended to change or alter the coverage that is provided in the insurance policy. The form is intended ONLY to provide additional information.  Helps to identify “red flags” that should be brought to the attention of the Insurance Analyst for further information or guidance.  Endorsement forms

65 Risk Management and Insurance In Contracting Council of Contracting Agencies Thank You!


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