Presentation on theme: "University Link Light Rail Project"— Presentation transcript:
1 University Link Light Rail Project Owner Controlled Insurance Program (OCIP)Presented bySound Transit Risk Management Division
2 University Link Light Rail Project What is an Owner Controlled Insurance Program (OCIP)?An OCIP is a controlled insurance program that insures:Sound Transit,University of Washington,General Contractors,Enrolled Subcontractors, andOther designated parties,for Work performed at the Project Site and designated off-site activitiesassociated with the project (if any).2
4 University Link Light Rail Project AdvantagesThe U-Link OCIP is a “project-specific” OCIPComplies w/ UW Contract Requirements (ST/UW MOA and MIA)Provides dedicated limits of insurance for large projectsRemoves gaps in insurance coverage, e.g. Builders RiskCoordinates loss control and claim process (control political risk)Improves risk management of multiple Contractors/SubcontractorsProvides potential cost savings over traditional insurance4
5 University Link Light Rail Project DisadvantagesOCIP management reporting may result in additional administrative burdenOCIP Insurance Cost Worksheet (Pre-Award) and Change OrdersOCIP Insurance ApplicationOCIP EnrollmentOCIP Insurance Deduct AuditsClaim Reviews (including claim investigation support, etc.)5
6 University Link Light Rail Project Central Link OCIP Lessons LearnedU-Link OCIP Improvements MadeComprehensive OCIP Insurance ManualPre-Bid & Pre-Con OrientationContractor Claim Deductible ResponsibilityInsurance Claims Adjustment ProceduresContract Enforcement & Contractor CooperationOn-Site OCIP Administration Representative
7 University Link Light Rail Project Who is Covered?Sound Transit’s interest in project(s)University of Washington’s interestsAdditional Insureds as required by agreementsContractors who have:been awarded contract/subcontract work;met the enrollment requirements; andbeen issued a Certificate of Insurance.
8 University Link Light Rail Project Who is NOT Covered?Parties not involved in day-to-day construction activitiesExamples include:Contract Haulers or TruckersVendors, SuppliersArchitects & EngineersOther Professional Services firmsHazardous materials remediation contractors8
9 University Link Light Rail Project Sound Transit Furnished OCIP InsurancePrimary Commercial General Liability (CGL)Westchester - $1M/Occ - $2M AggIncludes Stop-Gap Employers LiabilityExcess Liability3 Excess Layers = $100M Limit Tower of CoverageBuilders RiskLexington - $100M/Occ - $100M AggExcess Builders Risk2 Excess Layers = $300M Limit Tower of Coverage ($300M x $100 = $400M)Contractors Pollution LiabilityACE - $50M/Occ - $50M AggRefer to OCIP Insurance Manual for more detailed description of OCIP coverages.
10 University Link Light Rail Project Contractor Responsibility for Deductibles/Self-Insured RetentionsCommercial General Liability - $100,000 per OccurrenceBuilders Risk - First $250,000 per OccurrenceContractors Pollution Liability - $250,000 per Occurrence
11 University Link Light Rail Project Contractor Furnished InsuranceAutomobile Liability$1M Combined Single LimitWorkers’ Compensation and Employers LiabilityWorkers’ Compensation - Statutory in Washington StateStop-Gap Employers Liability - $1MCommercial General Liability and Excess/Umbrella Liability$1M/Occ & $2M AggEnrolled Contractors and Subcontractors must provide currentCertificates of Insurance to Sound Transit throughOCIP Administration Representative.11
12 University Link Light Rail Project OCIP Insurance ManualYour reference for all OCIP protocols and proceduresDefines program requirementsLists OCIP insurance coveragesIncludes forms with explanationsAvailable on the U-Link OCIP WebsiteOther sources:OCIP Administration RepresentativeSound Transit Risk Management DivisionNote: In the event of conflicts of OCIP coverage and terms between the ContractDocuments (the Contract and the OCIP Insurance Manual) and the actualOCIP policies, the OCIP policies will prevail. (Contract Art J.2)
13 University Link Light Rail Project OCIP Administration Representative (OAR)Conduit for Information Flow Between Resident Engineer, ST RiskManagement, ST Construction Safety, and Contractor(s)Facilitates Administration of Sound Transit’s OCIP on the U-Link ProjectOCIP EnrollmentCollection and distribution of Incident ReportsAssists in routing of Claim Reports
14 University Link Light Rail Project INCIDENTSvs.CLAIMS14
15 University Link Light Rail Project Incident ReportingContractors and Subcontractors must:Complete Incident Report Formbefore end of shiftNOTE: This form is NOT usedto establish an insurance claim.Provide complete documentation of incidentComplete description (What happened?)Photographs (Preserve evidence)Witness statements, if anyDeliver completed Incident Report Form and documentationto OCIP Administration Representative for distribution.
16 University Link Light Rail Project Incident Reporting Process FlowIncidents Reported by Contractors, Sound Transit Employees, or SecurityIncident Report Completed by Contractor or SubcontractorIncident Report Completed by Sound Transit EmployeesIncident Report Completed by SecuritySound TransitResident EngineerOCIP Administration RepresentativeSound Transit Risk Management DivisionSound Transit Construction SafetyInsurers[CGL] [BR] [CPL]
17 University Link Light Rail Project Incident Reporting - Incident DefinitionsSafety Incident – Any accident resulting in bodily injuryor property damage to any individual (Contractor or Third-Party)or to the project itself; or, any near miss that had the potential ofconcluding similarly.OCIP Incident – Any accident resulting in bodily injuryor to the project itself that may give rise to an insurance claim.
18 University Link Light Rail Project Incident ReportingWhen incident occurs, Contractor/Subcontractor must:Alert Resident Engineer and OCIP Administration Representative (OAR)immediately and simultaneouslyOAR will then notify:Construction Safety ManagerST Risk Management DivisionAt Resident Engineer’s direction, take reasonable steps to:Preserve evidence in accordance with proper protocolsMitigate the lossProtect undamaged propertyAssist as required in investigation process
19 University Link Light Rail Project OCIP Insurance ClaimsMajority of Claims:3rd Party CGL ClaimsBuilders Risk ClaimsCommercial General LiabilityBuilders RiskContractors Pollution Liability3rd Party1st Party3rd Party
20 University Link Light Rail Project Claims Reporting ProcedureClaims Against Sound Transit(or claims that name both Sound Transitand Contractor)3rd Party must present a Sound Transitor Washington State Claim Form toSound Transit Board Administrator
21 University Link Light Rail Project Claims Against Sound Transit Reporting Process FlowClaim Form Completed3rd Party Claims Against STFormal Claims Presented to Sound Transitby Members of the General PublicDelivered/Mailed toSound TransitBoard AdministratorSound TransitRisk Management DivisionClaims GroupInsurer[CGL]OCIPAdmin. RepresentativeSound Transit Resident EngineerSound Transit Construction SafetyContractor
22 University Link Light Rail Project Claims Against Contractor3rd Party presents claim to Contractor (only)Examples:Attorney Demand LetterOther Written NoticeSummons and Complaint3rd Party need not present Sound Transitor Washington State Claim Form
23 University Link Light Rail Project Claims Against Contractor Reporting Process FlowAttorney Demand Letter, Other Written Demand, Summons and ComplaintDelivered/Mailed toContractor3rd Party Claims Against ContractorClaims Presented to Contractorsby Members of the General PublicSound Transit Resident EngineerOCIPAdmin. RepresentativeSound TransitRisk Management DivisionClaims GroupSound Transit Construction SafetyInsurer[CGL]
24 University Link Light Rail Project U-LINKOCIP POLICIESSOUND TRANSITCONTRACTSOUND TRANSITU-LINKOCIP MANUALContract forConstructionContracts forInsuranceContract Document24
25 University Link Light Rail Project Liability Claims – Contractor’s Obligations/ResponsibilitiesContractor must cooperate in investigation and claim process with:ST Risk ManagementOCIP CGL Insurer, WestchesterOCIP CGL Insurer’s Third-Party Administrator (TPA), ESISThe Contractor must refrain from:Admitting LiabilityMaking voluntary payments or incurring expensesMaking repairs without direction from Resident EngineerAssuming any obligationsMaking any promises to damaged parties(Such Actions are at Contractor’s Sole Expense)(COMMERCIAL GENERAL LIABILITY COVERAGE FORM, CG ,SECTION IV – COMMERCIAL GENERAL LIABILITY CONDITIONS,2. Duties In The Event Of Occurrence, Offense, Claim or Suit, d., pg. 11 of 16)
26 University Link Light Rail Project OCIP Primary General Liability Policy – WestchesterInsuring AgreementThe insurance company will pay those sums that the insured becomeslegally obligated to pay as damages because of bodily injuryor property damage to which the insurance applies.(Subject to all terms, definitions, conditions, exclusions, and limitations in the policy.)The insurance company may, at its discretion, investigateany occurrence and settle any claim or suit that may result.(COMMERCIAL GENERAL LIABILITY COVERAGE FORM, CG ,SECTION I - COVERAGES, COVERAGE A BODILY INJURY AND PRPERTY DAMAGE LIABILITY,1. Insuring Agreement, a., pg. 1 of 16)
27 University Link Light Rail Project OCIP Primary General Liability Policy – WestchesterDuties in Event of Occurrence, Offense, Claim or SuitNamed Insured must:Immediately record specifics and date receivedNotify insurance company as soon as practicableImmediately send insurance company any demands, notices,summonses or legal papers receivedAuthorize insurance company to obtain records and other informationCooperate with insurance company in investigation,settlement, or defenseAssist insurance company in enforcement of any right of subrogation(COMMERCIAL GENERAL LIABILITY COVERAGE FORM, CG ,SECTION IV – COMMERCIAL GENERAL LIABILITY CONDITIONS,2. Duties In The Event of Occurrence, Offense, Claim or Suit, pgs. 10 and 11 of 16)
28 University Link Light Rail Project Liability Claims – Claim ManagementST Risk Management Division coordinates claim processQuality control of claims handling processMonitors claims adjusting and investigationNote: Westchester (CGL Insurer) and ESIS (Adjuster)Communicates with Westchester and ESISReports to RE on status of claimsMeets periodically with RE and Contractor on status of claimsWestchester/ESIS will determine liability and all settlement amounts(As noted in the CGL Policy Insuring Agreement)
29 University Link Light Rail Project Builders Risk Coverage - What is coveredBuilders Risk is a special type of property insurance that protectsthe Owner and Contractor/Subcontractors with 1st Party Coverage:Against all risks of direct physical loss of or damage toinsured property during course of construction:While at Insured Project locationWhile in offsite temporary storageWhile in inland transitIncludes Permanent Works and Temporary Works(Subject to all policy terms, conditions, exclusions, and limitations)(LEXINGTON COMPLETED VALUE BUILDERS RISK POLICY, LEXBLDRSRSK.DOC,PART A – COVERAGE, 1. INSURING AGREEMENT and 2. PROPERTY INSURED, pgs. 4 and 5 of 22)
30 University Link Light Rail Project Builders Risk Coverage - What is not coveredDoes not cover:Loss, theft, or damage to Contractor’s/Subcontractor’s tools,machinery, plant and equipment, spare parts, and accessories:Whether owned, loaned, hired, or leased, andNot destined to become a permanent part of thecompleted Insured Project.(Contractors/Subcontractors are advised to arrange for their ownContractor’s equipment insurance for any owned, leased,or borrowed equipment.)(LEXINGTON COMPLETED VALUE BUILDERS RISK POLICY, LEXBLDRSRSK.DOC,PART B – EXCLUSIONS AND LIMITATIONS, 2. PROPERTY EXCLUDED, B., pg. 12 of 22)
31 University Link Light Rail Project Builders Risk Claim Reporting Process FlowContractorReceives ClaimorCompletes ST Claim Form1st Party Builders Risk ClaimsBuilders Risk Claims Asserted Against Contractors or Reported by ContractorsSound Transit Resident EngineerOCIPAdministration RepresentativeSound TransitRisk Management DivisionSound Transit Construction SafetyInsurer[BR]
32 University Link Light Rail Project Contractors Pollution Liability CoverageCovers loss incurred as a result of a pollution condition“Pollution condition”Discharge, dispersal, release, escape, migration, or seepageOf any solid, liquid, gaseous, or thermal irritant, contaminantor pollutantOn, in, into, or upon land and structures thereon,the atmosphere, surface water, or groundwater.(Subject to all policy terms, definitions, conditions, exclusions,limitations, and the self-insured retention.)(ACE CONTRACTORS POLLUTION LIABILITY II INSURANCE POLICY,I. INSURING AGREEMENT, pg. 1 of 8, and V. DEFINITIONS, R., pg. 3 of 8)
33 University Link Light Rail Project Contractors Pollution Liability Claim Reporting Process Flow3rd Party Contractors Pollution Liability ClaimsContractor Pollution Liability Claims Reported by ContractorsContractorProvides an Immediate Verbal ReportFollowed by aCompleted Incident Report FormSound Transit Resident EngineerSound Transit Construction SafetySound TransitRisk Management DivisionClaims GroupOCIPAdministration RepresentativeInsurer[CPL]
34 University Link Light Rail Project Contractor Responsibility for Deductibles/Self-Insured RetentionsCommercial General Liability - $100,000 per OccurrenceBuilders Risk - First $250,000 per OccurrenceContractors Pollution Liability - $250,000 per Occurrence34
35 University Link Light Rail Project Deductible Charge-Back SystemInsurer(s) will invoice Sound Transit for all deductible costsIncludes Claim Adjustment Fees and Allocated ExpensesSound Transit will pay insurer’s invoice for deductible costsDeductible costs will be allocated to Contractor(s) upon the adjuster’sinvestigation/apportionment of responsibilitySound Transit will send monthly claims invoices to Contractor(s)Contractor(s) shall reimburse Sound Transit within 30 daysUnpaid invoices will be reconciled/deducted from contractor’s payments
36 University Link Light Rail Project Q & AOpen Discussion36
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