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

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

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

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 4

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.) 5

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

University Link Light Rail Project 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 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 8

University Link Light Rail Project 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 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 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. 11

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)

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

University Link Light Rail Project INCIDENTS vs. CLAIMS 14

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.

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

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 to the project itself that may give rise to an insurance claim.

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

University Link Light Rail Project OCIP Insurance Claims Majority of Claims: 3rd Party CGL Claims Builders Risk Claims Commercial General Liability Builders Risk Contractors Pollution Liability 3rd Party 1st Party 3rd Party

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

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

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

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

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

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)

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)

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)

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)

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 1st 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)

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)

University Link Light Rail Project Builders Risk Claim Reporting Process Flow Contractor Receives Claim or Completes ST Claim Form 1st Party Builders Risk Claims Builders Risk Claims Asserted Against Contractors or Reported by Contractors Sound Transit Resident Engineer OCIP Administration Representative Sound Transit Risk Management Division Sound Transit Construction Safety Insurer [BR]

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)

University Link Light Rail Project Contractors Pollution Liability Claim Reporting Process Flow 3rd Party Contractors Pollution Liability Claims Contractor Pollution Liability Claims Reported by Contractors Contractor Provides an Immediate Verbal Report Followed by a Completed Incident Report Form Sound Transit Resident Engineer Sound Transit Construction Safety Sound Transit Risk Management Division Claims Group OCIP Administration Representative Insurer [CPL]

University Link Light Rail Project 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 34

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

University Link Light Rail Project Q & A Open Discussion 36