Legal Issues with Obtaining Insurance for Large Transit Projects (2014) / Chapter Skim
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Pages 8-19
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From page 8... ...
8 issues its own debt that is held by bondholders. In order to discharge its fiduciary obligations to bondholders, the agency may have to insure the assets that are being constructed as part of its capital program.
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9 • Construction of new transportation/ intermodal centers, stations, and rail systems. • Maintenance facility, track, and signal improvements.
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10 what extent the contractor assumed the risk as part of its means and methods. These claims, however, often revolve around commercial allocation of risk, as contrasted with insurance allocation of risk.
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11 sponsibility for both design and construction. This has corresponding impact on the risks that the owner will need to risk finance, either through commercial terms (relying on the balance sheet of the DB contractor, which is usually the lead contractor, and its designer)
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12 allocated in the purchase and sale agreement or similar procurement document. • Liability coverage for injuries suffered by third parties (including the transit agency's employees)
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13 used to control the cost of insurance by not transferring high frequency, low severity losses to the insurance company. These retentions are dealt with in greater detail in Section VI.B of this digest.
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14 attributable to bodily injury, sickness, disease or death, or to an injury to or destruction of tangible property (other than the Work itself) , but only to the extent caused by negligent acts or omissions of the Contractor, a Subcontractor, anyone directly or indirectly employed by them or anyone for whose acts or expenses is caused in part by a party indemnified hereunder.
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15 the prohibition is that it may lessen the incentive to provide a safe construction site. A typical anti-indemnity statute in California provides: Provisions, clauses, covenant, or agreement contained in, collateral to, or affecting any construction contract and that purport to indemnify the promisee against any liability for damages for death or bodily injury to persons, injury to property, or other loss, damage or expense arising from the sole negligence or willful misconduct of the promisee or the promisee's agents servants, or independent contractors who are directly responsible to the promisee or for defects in design furnished by those persons are against public and are void and unenforceable.32 (Emphasis added.)
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16 of the Flood Disaster Protection Act of 197336 for projects having insurable cost of $10,000 or more. FTA Certifications and Assurances do not directly specify insurance requirements but do reflect cost principles.
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17 liable for the negligence of their contractors and employees. Negligence is generally defined as failure to exercise the care a reasonably prudent person would exercise under the same circumstances that led to the injury.
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18 from it may be claimed by the injured party. Whether the applicable standard of care has been breached is determined by the trier of facts and is usually phrased to the fact-finder in terms of what a reasonable prudent person would have exercised under the circumstances.51 2.
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19 In 2012, for example, insurance brokers indicated a 10 to 20 percent increase in premiums in practice policies with increased minimum primary CGL limits, in addition to almost doubling OCIP rates.57 3. Acts of God -- Force Majeure Another legal issue is the question of to what extent is the insurer, owner, or contractor responsible for damages caused by so-called "Acts of God" or "Force Majeure." Understanding Acts of God has become extremely important in view of the extensive damage caused by modern hurricanes and storm surges.
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