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1 Presented by Sound Transit Risk Management Division Owner Controlled Insurance Program (OCIP) University Link Light Rail Project.

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Presentation on theme: "1 Presented by Sound Transit Risk Management Division Owner Controlled Insurance Program (OCIP) University Link Light Rail Project."— Presentation transcript:

1 1 Presented by Sound Transit Risk Management Division Owner Controlled Insurance Program (OCIP) University Link Light Rail Project

2 2 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, and Other designated parties, for Work performed at the Project Site and designated off-site activities associated with the project (if any).

3 3 Improved Safety Performance Improved Safety Performance Greater Claims Management Control Greater Claims Management Control Increased M/W/DBE Participation Increased M/W/DBE Participation Reduced Loss Litigation Reduced Loss Litigation Improved Cash Flow Improved Cash Flow Dedicated Products & Completed Operations Coverage Dedicated Products & Completed Operations Coverage Better Coverage Terms & Conditions Better Coverage Terms & Conditions Higher Limits OCIP BENEFITS

4 4 University Link Light Rail Project Advantages The U-Link OCIP is a “project-specific” OCIP Complies w/ UW Contract Requirements (ST/UW MOA and MIA) Provides dedicated limits of insurance for large projects Removes gaps in insurance coverage, e.g. Builders Risk Coordinates loss control and claim process (control political risk) Improves risk management of multiple Contractors/Subcontractors Provides potential cost savings over traditional insurance

5 5 University Link Light Rail Project Disadvantages OCIP management reporting may result in additional administrative burden OCIP Insurance Cost Worksheet (Pre-Award) and Change Orders OCIP Insurance Application OCIP Enrollment OCIP Insurance Deduct Audits Claim Reviews (including claim investigation support, etc.)

6 6 University Link Light Rail Project Central Link OCIP Lessons Learned U-Link OCIP Improvements Made Comprehensive OCIP Insurance Manual Pre-Bid & Pre-Con Orientation Contractor Claim Deductible Responsibility Insurance Claims Adjustment Procedures Contract Enforcement & Contractor Cooperation On-Site OCIP Administration Representative

7 7 Who is Covered? Sound Transit’s interest in project(s) University of Washington’s interests Additional Insureds as required by agreements Contractors who have: – been awarded contract/subcontract work; – met the enrollment requirements; and – been issued a Certificate of Insurance. University Link Light Rail Project

8 8 Who is NOT Covered? Parties not involved in day-to-day construction activities –Examples include:  Contract Haulers or Truckers  Vendors, Suppliers  Architects & Engineers  Other Professional Services firms  Hazardous materials remediation contractors

9 9 Sound Transit Furnished OCIP Insurance Primary Commercial General Liability (CGL) –Westchester - $1M/Occ - $2M Agg –Includes Stop-Gap Employers Liability Excess Liability –3 Excess Layers = $100M Limit Tower of Coverage Builders Risk –Lexington - $100M/Occ - $100M Agg Excess Builders Risk –2 Excess Layers = $300M Limit Tower of Coverage ($300M x $100 = $400M) Contractors Pollution Liability –ACE - $50M/Occ - $50M Agg Refer to OCIP Insurance Manual for more detailed description of OCIP coverages. University Link Light Rail Project

10 10 Contractor Responsibility for Deductibles/Self-Insured Retentions Commercial General Liability - $100,000 per Occurrence Builders Risk - First $250,000 per Occurrence Contractors Pollution Liability - $250,000 per Occurrence University Link Light Rail Project

11 11 University Link Light Rail Project Contractor Furnished Insurance Automobile Liability – $1M Combined Single Limit Workers’ Compensation and Employers Liability – Workers’ Compensation - Statutory in Washington State – Stop-Gap Employers Liability - $1M Commercial General Liability and Excess/Umbrella Liability – $1M/Occ & $2M Agg Enrolled Contractors and Subcontractors must provide current Certificates of Insurance to Sound Transit through OCIP Administration Representative.

12 12 University Link Light Rail Project OCIP Insurance Manual Your reference for all OCIP protocols and procedures Defines program requirements Lists OCIP insurance coverages Includes forms with explanations Available on the U-Link OCIP Website Other sources: – OCIP Administration Representative – Sound Transit Risk Management Division Note: In the event of conflicts of OCIP coverage and terms between the Contract Documents (the Contract and the OCIP Insurance Manual) and the actual OCIP policies, the OCIP policies will prevail. (Contract Art. 8.01.J.2)

13 13 University Link Light Rail Project OCIP Administration Representative (OAR) Conduit for Information Flow Between Resident Engineer, ST Risk Management, ST Construction Safety, and Contractor(s) Facilitates Administration of Sound Transit’s OCIP on the U-Link Project – OCIP Enrollment – Collection and distribution of Incident Reports – Assists in routing of Claim Reports

14 14 University Link Light Rail Project INCIDENTS vs. CLAIMS

15 15 University Link Light Rail Project Incident Reporting Contractors and Subcontractors must: Complete Incident Report Form before end of shift NOTE: This form is NOT used to establish an insurance claim. Provide complete documentation of incident Complete description (What happened?) Photographs (Preserve evidence) Witness statements, if any Deliver completed Incident Report Form and documentation to OCIP Administration Representative for distribution.

16 16 University Link Light Rail Project Sound Transit Construction Safety OCIP Administration Representative Sound Transit Risk Management Division Sound Transit Resident Engineer Insurers [CGL] [BR] [CPL] Incident Report Completed by Contractor or Subcontractor Incident Report Completed by Sound Transit Employees Incident Report Completed by Security Incident Reporting Process Flow Incidents Reported by Contractors, Sound Transit Employees, or Security

17 17 University Link Light Rail Project Incident Reporting - Incident Definitions Safety Incident – Any accident resulting in bodily injury or property damage to any individual (Contractor or Third-Party) or to the project itself; or, any near miss that had the potential of concluding similarly. OCIP Incident – Any accident resulting in bodily injury or property damage to any individual (Contractor or Third-Party) or to the project itself that may give rise to an insurance claim.

18 18 University Link Light Rail Project Incident Reporting When incident occurs, Contractor/Subcontractor must: Alert Resident Engineer and OCIP Administration Representative (OAR) immediately and simultaneously – OAR will then notify:  Construction Safety Manager  ST Risk Management Division At Resident Engineer’s direction, take reasonable steps to: – Preserve evidence in accordance with proper protocols – Mitigate the loss – Protect undamaged property – Assist as required in investigation process

19 19 University Link Light Rail Project Majority of Claims: 3 rd Party CGL Claims Builders Risk Claims OCIP Insurance Claims Commercial General Liability Contractors Pollution Liability Builders Risk 3 rd Party1 st Party3 rd Party

20 20 University Link Light Rail Project Claims Reporting Procedure Claims Against Sound Transit (or claims that name both Sound Transit and Contractor) –3 rd Party must present a Sound Transit or Washington State Claim Form to Sound Transit Board Administrator

21 21 University Link Light Rail Project Claim Form Completed Delivered/Mailed to Sound Transit Board Administrator Sound Transit Resident Engineer Insurer [CGL] Sound Transit Construction Safety OCIP Admin. Representative Sound Transit Risk Management Division Claims Group Claims Against Sound Transit Reporting Process Flow 3 rd Party Claims Against ST Formal Claims Presented to Sound Transit by Members of the General Public Contractor

22 22 University Link Light Rail Project Claims Against Contractor – 3 rd Party presents claim to Contractor (only) – Examples:  Attorney Demand Letter  Other Written Notice  Summons and Complaint – 3 rd Party need not present Sound Transit or Washington State Claim Form

23 23 University Link Light Rail Project Attorney Demand Letter, Other Written Demand, Summons and Complaint Delivered/Mailed to Contractor Sound Transit Resident Engineer Insurer [CGL] Sound Transit Construction Safety OCIP Admin. Representative Sound Transit Risk Management Division Claims Group Claims Against Contractor Reporting Process Flow 3 rd Party Claims Against Contractor Claims Presented to Contractors by Members of the General Public

24 24 University Link Light Rail Project SOUND TRANSIT U-LINK OCIP MANUAL U-LINK OCIP POLICIES Contract for Construction SOUND TRANSIT CONTRACT Contract Document Contracts for Insurance

25 25 University Link Light Rail Project Liability Claims – Contractor’s Obligations/Responsibilities Contractor must cooperate in investigation and claim process with: – ST Risk Management – OCIP CGL Insurer, Westchester – OCIP CGL Insurer’s Third-Party Administrator (TPA), ESIS The Contractor must refrain from: – Admitting Liability – Making voluntary payments or incurring expenses – Making repairs without direction from Resident Engineer – Assuming any obligations – Making any promises to damaged parties (Such Actions are at Contractor’s Sole Expense) (COMMERCIAL GENERAL LIABILITY COVERAGE FORM, CG 00 01 10 01, SECTION IV – COMMERCIAL GENERAL LIABILITY CONDITIONS, 2. Duties In The Event Of Occurrence, Offense, Claim or Suit, d., pg. 11 of 16)

26 26 University Link Light Rail Project OCIP Primary General Liability Policy – Westchester Insuring Agreement The insurance company will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or 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, investigate any occurrence and settle any claim or suit that may result. (COMMERCIAL GENERAL LIABILITY COVERAGE FORM, CG 00 01 10 01, SECTION I - COVERAGES, COVERAGE A BODILY INJURY AND PRPERTY DAMAGE LIABILITY, 1. Insuring Agreement, a., pg. 1 of 16)

27 27 University Link Light Rail Project OCIP Primary General Liability Policy – Westchester Duties in Event of Occurrence, Offense, Claim or Suit Named Insured must: – Immediately record specifics and date received – Notify insurance company as soon as practicable – Immediately send insurance company any demands, notices, summonses or legal papers received – Authorize insurance company to obtain records and other information –Cooperate with insurance company in investigation, settlement, or defense – Assist insurance company in enforcement of any right of subrogation (COMMERCIAL GENERAL LIABILITY COVERAGE FORM, CG 00 01 10 01, SECTION IV – COMMERCIAL GENERAL LIABILITY CONDITIONS, 2. Duties In The Event of Occurrence, Offense, Claim or Suit, pgs. 10 and 11 of 16)

28 28 University Link Light Rail Project Liability Claims – Claim Management ST Risk Management Division coordinates claim process – Quality control of claims handling process – Monitors claims adjusting and investigation Note: Westchester (CGL Insurer) and ESIS (Adjuster) – Communicates with Westchester and ESIS – Reports to RE on status of claims – Meets periodically with RE and Contractor on status of claims Westchester/ESIS will determine liability and all settlement amounts (As noted in the CGL Policy Insuring Agreement)

29 29 University Link Light Rail Project Builders Risk Coverage - What is covered Builders Risk is a special type of property insurance that protects the Owner and Contractor/Subcontractors with 1 st Party Coverage: –Against all risks of direct physical loss of or damage to insured property during course of construction:  While at Insured Project location  While in offsite temporary storage  While in inland transit – Includes 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 30 University Link Light Rail Project Builders Risk Coverage - What is not covered Does 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, and  Not destined to become a permanent part of the completed Insured Project. (Contractors/Subcontractors are advised to arrange for their own Contractor’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 31 University Link Light Rail Project Contractor Receives Claim or Completes ST Claim Form OCIP Administration Representative Sound Transit Resident Engineer Insurer [BR] Sound Transit Construction Safety Sound Transit Risk Management Division Builders Risk Claim Reporting Process Flow 1 st Party Builders Risk Claims Builders Risk Claims Asserted Against Contractors or Reported by Contractors

32 32 University Link Light Rail Project Contractors Pollution Liability Coverage Covers loss incurred as a result of a pollution condition – “Pollution condition”  Discharge, dispersal, release, escape, migration, or seepage  Of any solid, liquid, gaseous, or thermal irritant, contaminant or pollutant  On, 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 33 University Link Light Rail Project Contractor Provides an Immediate Verbal Report Followed by a Completed Incident Report Form OCIP Administration Representative Sound Transit Resident Engineer Insurer [CPL] Sound Transit Construction Safety Sound Transit Risk Management Division Claims Group Contractors Pollution Liability Claim Reporting Process Flow 3rd Party Contractors Pollution Liability Claims Contractor Pollution Liability Claims Reported by Contractors

34 34 Contractor Responsibility for Deductibles/Self-Insured Retentions Commercial General Liability - $100,000 per Occurrence Builders Risk - First $250,000 per Occurrence Contractors Pollution Liability - $250,000 per Occurrence University Link Light Rail Project

35 35 University Link Light Rail Project Deductible Charge-Back System Insurer(s) will invoice Sound Transit for all deductible costs – Includes Claim Adjustment Fees and Allocated Expenses Sound Transit will pay insurer’s invoice for deductible costs Deductible costs will be allocated to Contractor(s) upon the adjuster’s investigation/apportionment of responsibility Sound Transit will send monthly claims invoices to Contractor(s) Contractor(s) shall reimburse Sound Transit within 30 days Unpaid invoices will be reconciled/deducted from contractor’s payments

36 36 Q & A Open Discussion University Link Light Rail Project


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