Legal Issues with Obtaining Insurance for Large Transit Projects (2014) / Chapter Skim
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Pages 22-35
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From page 22... ...
22 policy or, alternatively, by retaining the risk and allocating funds to meet expected losses through formalized programs. Examples of such formalized programs are "self-insurance" or "captive insurance." Self-insurance in this context is more formal and disciplined than assuming risk in an insurance policy through a deductible or so-called self-insured retention.
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From page 23... ...
23 quired under the contracts. Each designer or contractor provides the insurance and the cost of that insurance is part of the contract bid or cost.
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24 other parties for their injuries, including, for example, other contractors or subcontractors who may have caused or contributed to the injury, owners for site conditions or security issues, or design team members for errors or omissions. This presents a general liability exposure to those particular parties who may have recourse against the employer under a contractual indemnification.
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25 contribute limits from different insurers, complicating defense representation. • Railroad Protective Liability.
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26 • General liability and umbrella or excess coverage should be written on a so-called occurrence form, which responds to occurrences during the policy period regardless of when they are presented to the insurer. The alternative, known as the claims made form,77 responds to claims made while the policy is in force, subject to other restrictions such as a retroactive date.
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From page 27... ...
27 out of the negligence of the named insured, so there likely will be no coverage to the agency in the absence of a contractor's negligence.81 Additional insured status is not a substitute for an owner's own general liability policy or an enforceable and financially supported indemnity.82 • When an owner decides to use an OCIP or a CCIP, the various contracts should contain consistent language outlining the coverages to be carried and the limits provided by the contractors in the absence of the OCIP or CCIP. There are three reasons for this.
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28 • Contractor-Provided Stand-Alone Builder's Risk. In certain cases, a contractor may provide a separate builder's risk policy, covering both the contractor's and the owner's interests, with terms and conditions tailored to the specific project.
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29 The option to extend an operational property insurance policy to cover property in the course of construction may be attractive to transit agencies for a number of reasons. Beyond assuring a consistent loss adjustment in the case of loss, the terms and conditions offered by an underwriter with a longer relationship with the transit agency are likely to be more favorable.
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30 The above list is roughly in order of the distribution of claims frequency, with owners the most likely to bring claim and other third parties the least likely. The extent of the liability exposure is defined by the interaction of 1)
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31 3. Pollution or Environmental Impairment In this section, we are concerned with two somewhat distinct issues: 1)
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32 • As with the exposures to other third-party liability losses, the most appropriate treatment of the pollution or environmental impairment risk is to transfer it to the contracting parties (abatement contractor, general contractor, etc.) that control the risk through appropriate indemnity clauses in the agreements.
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From page 33... ...
33 (property under construction) or design professional's errors and omissions, but strictly speaking, they do not.89 While these policies may be procured through the same process and insured by the same insurer or brokered by the same broker, they are typically separate transactions and not part of a single rating plan.
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34 eliminating the requirement that individual contractors or subcontractors secure higher limits at redundant cost. Third, by eliminating the requirement that individual contractors or subcontractors provide their own limits at their cost, the public entity is more likely to achieve its DBE or regional contractor goals.
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From page 35... ...
35 large firms decline to quote because the insurance component of their bid contains additional profit, or their own insurance programs provide a known scope of broad coverage. Contractor experience and familiarity with OCIPs may lessen this resistance.
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