Contractor Insurance & Risk Transfer

Background

Look Up Your Agent/Broker

https://www.irmi.com/sf/insurance-continuing-education/cris/agent-broker-directory

Construction Risk and Insurance Specialist – CRIS professional designation

Insurance Co. A Insurance Co. BContractor /

Property OwnerSubcontractor /

Commercial Tenant

Contractual Risk Transfer & Insurance

Contract Insurance

Hold Harmless/ Indemnification

State Specific

Insurance Requirements

Before Work Starts

Coverage/Limits

Edrsmt/Exclusions

Liability Auto

Exclusions

Workers’ CompEndorsements

Certificate (COI) Endorsements

Endorsements

Records Retention

Certificate

Coverage Verification, ExclusionDisclosures, Endorsements & Risk Transfer

Exclusions

Defect Litigation

V V

Construction Defect Litigation

• What are we talking about?

Construction Defect Litigation

Nine (9) years + two (2) years if discovery occurs in

the 8th or 9th years

Total of 11 years

What is the Statute of Repose (Limitations) in the

State of Utah?

Statute of Repose

Great State of Utah

Statute of Repose

Contract

Statute of Repose

Statute of Repose can range between 6 yrs to unlimited. Most States have a maximum of 10 years (unless fraud) - Check your own State.

9 years + 2 year tail for discovery

Exposure

*In a commercial general liability (CGL) coverageform, an accident, including continuous or repeatedexposure to substantially the same general harmfulconditions. General liability policies insure liabilityfor bodily injury (BI) or property damage (PD) that iscaused by an occurrence.

Occurrence Defined

Assume that a plumbing contractor has a CGL policy written on an occurrence basis with a term of January 1, 2011 to January 1, 2012.

This policy was renewed for seven consecutive years, with the current policy period being January 1, 2016 to January 1, 2017. On September 15, 2011, the contractor makes a mistake in installing a new plumbing unit in a home.

Completed Operations Exposure

On December 8, 2016, the plumbing system malfunctions as a result of the mistake, causing property damage to the home. The claim, however was not made until January 7, 2017. The claim would be covered by the 2016 policy, regardless of the fact that the negligent act occurred in 2011 and the claim was made in 2017.

Completed Operations Exposure

20162015 2017 201820122011 2013 2014

Occurrence Coverage Trigger Application

Installation Mistake

Property Damage -

Occurrence

Claim is Made

Risk Transfer

Hold Harmless / Indemnification Agreement

What is a great tool to transfer risk to a lower

tier (sub) contractor who did the work?

Contracts – Risk Transfer Agreement

Project Contract (Owner/GC)

• Hold Harmless / Indemnification.

• Correct coverage.

• Correct additional insured & other endorsements.

• Contractual obligations to transfer risk downstream.

Project Contract

Flow Down Clause-Upper Tier Perspective

The Contractor and Subcontractor shall be mutually bound by the terms of this Agreement and, to the extent that the provisions of AIA Document A201-2007 apply to this Agreement pursuant to Section 1.2 and provisions of the Prime Contract apply to the Work of the Subcontractor, the Contractor shall assume toward the Subcontractor all obligations and responsibilities the Owner, under such documents, assumes toward the Contractor, and the Subcontractor shall assume toward the Contractor all obligations and responsibilities which the Contractor, under such documents, assumes toward the Owner and the Architect. The Contractor shall have the benefit of all rights, remedies and redress against the Subcontractor that the Owner, under such documents, has against the Contractor, and the Subcontractor shall have the benefit of all rights, remedies and redress against the Contractor that the Contractor, under such documents, has against the Owner, insofar as applicable to this Subcontract. Where a provision of such documents is inconsistent with a provision of this Agreement, this Agreement shall govern.

Subcontract-(Upper Tier / Lower Tier)

• Breach of Contract??

• Hold Harmless / Indemnification.

• Correct coverage.

• Correct additional insured & other endorsements.

• Contractual obligations to transfer risk downstream.

• Flow down clause (Prime Contract.)

• Exclusion Prohibition.

Flow Down Clause – Lower Tier Perspective

By not reviewing the general contract, a subcontractor through a flow down clause may unwittingly agree to terms that arguably have nothing to do with its work. Terms that an unsuspecting subcontractor may be agreeing to via a flow down clause include termination clauses, claims processing clauses, indemnification clauses, and dispute resolution clauses.

Therefore, before signing a subcontract that contains a flow down clause subcontractors should insist on reviewing the general contractor agreement which the flown down clause is incorporating by reference.

Other Provisions

Subcontractor – Independent Contractor Warranty Provisions

What’s in your Policy?

Increased Deductible

•Increases Deductible ($10,000-$50,000)

COMMERCIAL GENERAL LIABILITY - NX GL 128 01 10

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.SUBCONTRACTOR SPECIAL CONDITIONS INCLUDING DEDUCTIBLE

This endorsement modifies insurance provided under the following:COMMERCIAL GENERAL LIABILITY COVERAGE PARTA. The following is added to SECTION IV – COMMERCIAL GENERAL LIABILITY CONDITIONS:Subcontractor Special Conditions1. Certificates of Insurance with Limits of Liability equal to or greater than the Limits of Insuranceprovided by this policy (underwritten by an insurance company with at least an “A-7” Best rating asdefined by AM Best) will be obtained from all “subcontractors” prior to commencement of any workpreformed for you. (Note: If this policy provides a per location or per project aggregate,“subcontractors” policy must also provide the same.)2. You will obtain written hold harmless agreements from “subcontractors” indemnifying you and theowner against all losses for work performed for you by any and all subcontractors.3. You will be named as an Additional Insured on all “subcontractors” General Liability policies.Evidence of compliance must be provided to us during annual premium audit. Failure to comply with theabove conditions will result in additional premium charged against contract costs for jobs not incompliance. Your failure to comply with the conditions listed above will not invalidate thisinsurance or alter our obligation to you under the terms of this policy except:1. Additional premium will be changed at a rate of $50.00 per $1,000 of contract cost2. If any of the above conditions are not satisfied, a deductible of $15,000 per claim will apply to anyclaim or “suit” under this policy seeking damages for “bodily injury”, “property damage” and/or“personal and advertising injury” arising out of the work performed by the “subcontractor” for theinsured. The deductible amounts apply to damages and all legal and loss adjustment expenses.Provisions for the application of deductibles under this policy are set forth in the DEDUCTIBLELIABILITY ENDORSEMENT.

Commercial General Liability Coverage maintained by the “subcontractors” shall be primary and thispolicy shall be excess of Limits of Liability of such insurance, notwithstanding the language of the OtherInsurance provisions of this policy.B. The following is added to Section V - DEFINITIONS“Subcontractor” or “subcontractors” means any person or entity who is not an employee of an insuredand does work or performs services for or on behalf of an insured.

Increased Rate

•Increases Rate from $3 or $5 rate against subbed cost up to a $50 rate against subbed cost

•Decreases coverage ($50,000)

•Eliminates coverage (Hammer Clause)

1

Eliminates Coverage

THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

NO COVERAGE APPLIES IF CONTRACTOR CONDITIONS NOT METThis endorsement modifies insurance provided under the following:COMMERCIAL GENERAL LIABILITY COVERAGE PARTA. SECTION IV – COMMERCIAL GENERAL LIABILITY CONDITIONS is amended and the following added:

No Coverage Applies If Contractor Conditions Not MetAs a condition precedent to any rights the insured may have under this Policy, the insured must comply with all of the conditions enumerated below. The insured agrees that we need not demonstrate any prejudice to us as a result of the insured’s failure to comply with any of the below conditions in order to enforce those conditions precedent to coverage. If prior to the commencement of any work, the insured fails to comply with the below conditions, any claim in which a “contractor” whose work directly or indirectly gives rises to the claim will not be payable under this Policy. We will have no obligation to either defend or indemnify the insured for any claims or legal actions brought against any insured.

The insured hereby warrants and agrees that any “contractor” has complied with all of the following conditions prior to the commencement of any work performed:(1) The “contractor” has signed and executed an agreement with the insured which contains the following provisions:(a) a hold harmless agreement indemnifying the insured, to the fullest extent permitted by law, against all losses arising out of the work performed by or on behalf of any such “contractor”, including all expenses and legal fees incurred to defend claims alleging suchlosses; and(b) a requirement for the “contractor” to name the insured as an Additional Insured under their Commercial General Liability policy;(2) The “contractor” has maintained “adequate insurance”;(3) The “contractor” has provided the insured with current Certificates of Insurance evidencing Commercial General Liability and Workers’ Compensation and Employer’s Liability coverage; and(4) All documents required must be kept on file and made available at our request. Nothing contained herein shall be held to vary, waive or extend any of the terms of the conditions, provisions, agreements or limitations of this Policy other than as stated below.

B. As used in this endorsement, SECTION V – DEFINITIONS is amended to include the following:1. “Adequate insurance” means Commercial General Liability Insurance, Workers’ Compensation and Employer’s Liability Insurance written by an insurance carrier with an A.M. Best rating of not less than A- VII and which:a. remains in force and effect from the date in which the contract for work being performed for the insured or on the insured’s behalf is executed until the date in which the work is completed and the insurance is not cancelled, discontinued nor does not expire during thisperiod of time;b. provides Commercial General Liability Limits of Insurance for such operations that are equal to or greater than the following Limits of Insurance;i. Each Occurrence Limit: $1,000,000ii. General Aggregate Limit: $2,000,000iii. Products/Completed Operations Aggregate Limit: $2,000,000

c. provides Workers’ Compensation and Employer’s Liability insurance in compliance with the statutes of the applicable state;

d. includes coverage for work being performed for the insured or on the “contractor’s” behalf;

e. does not exclude any claim, suit, loss, cost or expense arising out of any “bodily injury” to any “worker” of the “contractor” where the exclusion does not provide an exception for liability assumed by the insured under an “insured contract”;

f. does not contain any conditions or provisions that preclude coverage based on requirements for hiring or contracting with subcontractors or independent contractors; and

g. does not exclude any claim, suit, loss, cost or expense arising out of any “bodily injury” or “property damage” arising out of work being contracted to be performed by or performed by the “contractor”.

2. “Contractor” means contractors, subcontractors, independent contractors or any other person or entity hired to perform work for the insured or on the insured’s behalf.

3. “Worker” means any “employee”, “temporary worker”, “leased worker”, volunteer, apprentice, intern, casual laborer, borrowed employee, borrowed servant, independent contractor or subcontractor, or any person hired or retained by them, that performs work, whether directly or indirectly, for any “contractor”.

ALL OTHER TERMS AND CONDITIONS OF THE POLICY REMAIN UNCHANGED.

General Liability AND Workers’ Compensation AND Employers Liability

Insurance + A.M. Best rated A- VII

Coverage must remain in force once the contact is in place through the time the work is completed AND for

both 1st tier subs, and any subsequent tier subs hired directly & indirectly

No Exclusion on subs policies that excludes coverage for “work being

performed” – Scope of work

No exclusion with regards to an “Insured Contract” – CG 2139 or any

other Third-Party Action Over Exclusion/Limitation

B. As used in this endorsement, SECTION V – DEFINITIONS is amended to include the following:1. “Adequate insurance” means Commercial General Liability Insurance, Workers’ Compensation and Employer’s Liability Insurance written by an insurance carrier with an A.M. Best rating of not less than A- VII and which:a. remains in force and effect from the date in which the contract for work being performed for the insured or on the insured’s behalf is executed until the date in which the work is completed and the insurance is not cancelled, discontinued nor does not expire during thisperiod of time;b. provides Commercial General Liability Limits of Insurance for such operations that are equal to or greater than the following Limits of Insurance;i. Each Occurrence Limit: $1,000,000ii. General Aggregate Limit: $2,000,000iii. Products/Completed Operations Aggregate Limit: $2,000,000

c. provides Workers’ Compensation and Employer’s Liability insurance in compliance with the statutes of the applicable state;

d. includes coverage for work being performed for the insured or on the “contractor’s” behalf;

e. does not exclude any claim, suit, loss, cost or expense arising out of any “bodily injury” to any “worker” of the “contractor” where the exclusion does not provide an exception for liability assumed by the insured under an “insured contract”;

f. does not contain any conditions or provisions that preclude coverage based on requirements for hiring or contracting with subcontractors or independent contractors; and

g. does not exclude any claim, suit, loss, cost or expense arising out of any “bodily injury” or “property damage” arising out of work being contracted to be performed by or performed by the “contractor”.

2. “Contractor” means contractors, subcontractors, independent contractors or any other person or entity hired to perform work for the insured or on the insured’s behalf.

3. “Worker” means any “employee”, “temporary worker”, “leased worker”, volunteer, apprentice, intern, casual laborer, borrowed employee, borrowed servant, independent contractor or subcontractor, or any person hired or retained by them, that performs work, whether directly or indirectly, for any “contractor”.

ALL OTHER TERMS AND CONDITIONS OF THE POLICY REMAIN UNCHANGED.

Does not contain any provision that precludes coverage based on

requirements for hiring or contracting subcontractors/independent

contractors

Does not contain a “subcontracted work” exclusion

Exclusions

• Prior Completed or Abandoned Work Exclusion

• Continuous or Progressive Injury and Damage Exclusion

• Total Pollution Exclusion

• Damage to Work Performed by Subcontractors Exclusion (CG2294)

• Bodily Injury to Contractors or Subcontractors Exclusion (Action over lawsuits)

• EIFS (Synthetic Stucco) Exclusion

• Hot Tar Limitation / Exclusion

• Overspray Exclusion

• Roofing Related Water Damage Exclusion

• Silica / Dust Exclusion

• Soil Subsidence / Earth Movement Exclusion

• Spray Foam Exclusion

• Height Limitation

• Residential Construction Exclusion

• Condominium Construction Exclusion

• Apartment Construction Exclusion

• Town Home and Town House Constructions Exclusion

• Multi-family Construction Exclusion

• Time-Share Construction Exclusion

• Tract Housing Construction Exclusion

• Explosion, Collapse and Underground "XCU" Exclusion

• Cross Suit Liability Coverage Exclusion (Action over)

• Rip and Tear Exclusion

• Contractual Liability Limitation CG 21 39 (changes what is an insured contract)

• No Stacking of Limits of Insurance Limitation

• Sunset Provision / Clause

• Classification Limitation

Exclusion #1– Height Limitation (Roofer)

Exclusion #2– Town Home /Multi-Family (Plumbing)

Claimed Denied

Exclusion #3– Subsidence/Earth Movement (Excavator/Landscaper/Concrete/General Contractor)

SUBSIDENCE OR EARTH MOVEMENT EXCLUSION

COMMERCIAL GENERAL LIABILITY COVERAGE PARTOWNERS AND CONTRACTORS PROTECTIVE LIABILITY COVERAGE PART

This insurance does not apply to any “injury, damage, loss or expense” based upon or arising out of the subsidence of land or any earth movement, including but not limited to earthquake, landslide, mud flow, or earth sinking, rising or shifting, regardless of whether such subsidence or earth movement caused, aggravated or contributed concurrently or in any sequence to any “injury, damage, loss or expense”.

As used in this endorsement, “injury, damage, loss or expense” means any injury, damage, loss or expense covered under any Coverage Form or Policy to which this endorsement applies, and includes but is not limited to “bodily injury”, “property damage”, “personal and advertising injury”, medical expenses or any other coverages as may be defined under this Coverage Form, Policy or any applicable endorsement.

Landslide

Earth Movement – Settling/Compaction

Exclusion #4– Collapse, Underground, Explosion

Exclusion #5 – “Your Work” Exclusion

• $100,000 retaining wall.

• Wall fails.

• Property damage or Bodily injury.

• Insurance covers (subject to exclusions) the resulting damage, not the work product.

Exclusion #6– Subcontractors Work

Exclusion #7– Outright Residential or Tract Housing

NEW RESIDENTIAL EXCLUSION

It is hereby understood and agreed that the insurance afforded by this policy does not apply to any “Bodily Injury”, “Property Damage”, or “Personal and Advertising Injury” arising out of, caused by, related to, or attributable to, in whole or in part, any of the following: (a) “Your Work” in, around, on, or incorporated into any “condominium development”, “townhouse development”, “residential housing development”, “planned unit development”, or “mixed use development”; “Residential housing development” is a residential development consisting of one or more single family residential units in any or all phases of the completion of the development.

Exclusion #8– Prior Work

Prior Completed Work

“Bodily injury” or “property damage” arising out of, resulting from, caused by, contributed to, or in any way related, in whole or in part, to “your work” that was completed or abandoned by the insured prior to the inception date of the policy set forth in the Declarations.

20162015 2017 201820122011 2013 2014

Occurrence Coverage Trigger Application


Property Damage -

Occurrence

/------Prior Work Exclusion -------/

Both the work performed/Installation Mistake AND the Property Damage – Occurrence must occur

during the policy period

Exclusion #9 - Injury to Subcontractor & Subrogation• Do you (as the upper tier

contractor) have liabilitycoverage in the event of a lawsuit from a subs employee, or is this coverage excluded?



• Do you (as the upper tier contractor) have a Waiver of Subrogation in your favor from your lower tier’s WC company?



• Do you (as the upper tier contractor) have a Waiver of Subrogation in your favor from your lower tier’s WC company?

• Do you have a written Indemnification agreement & is it an “insured contract” on your subs GL policy?

A type of action in which an injured employee, after collecting workers compensation benefits from the employer (Subcontractor), sues a third party (General Contractor- “GC”) for contributing to the employee's injury. Then, because of some type of contractual relationship between the third party (GC) and the employer (Sub), the liability is passed back to the employer by prior agreement.

Additionally, there are instances in which the third party (GC) can circumvent the exclusive remedy doctrine of workers compensation and enjoin the employer (Sub) in the action. Depending on the nature and allegations of the action, coverage may be afforded under the contractual liability section of the employer's commercial liability policy (unless 9f is removed -CG 2139) or the employers liability section of the employer's (Sub) workers compensation policy

IRMI Definition – 3rd Party Action Over

Third Party Action Over Lawsuits

• Part B (WC) Employer Liability (Recommend $1,000,000 limit + umbrella go over the WC.)

• If Upper Tier has a Hold Harmless/ Indemnification, pushes liability back to subcontractor.

• General Liability could cover the employer if entered into a subcontractor agreement, unless 9f insured contract is taken out of your policy (CG 21 39 or similar limitation.)

#10 Contractual Liability Limitation2. ExclusionsThis insurance does not apply to:b. Contractual Liability"Bodily injury" or "property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages: (1) That the insured would have in the absence of the contract or agreement; or (2) Assumed in a contract or agreement that is an "insured contract", provided the "bodily injury" or "property damage" occurs subsequent to the execution of the contract or agreement. Solely for the purposes of liability assumed in an "insured contract", reasonable attorneys' fees and necessary litigation expenses incurred by or for a party other than an insured are deemed to be damages because of "bodily injury" or "property damage", provided: (a) Liability to such party for, or for the cost of, that party's defense has also been assumed in the same "insured contract"; and (b) Such attorneys' fees and litigation expenses are for defense of that party against a civil or alternative dispute resolution proceeding in which damages to which this insurance applies are alleged.

9. "Insured contract" means:

f. That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) underwhich you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization, provided the "bodily injury" or "property damage" is caused, in whole or in part, by you or by those acting on your behalf. However, such part of a contract or agreement shall onlybe considered an "insured contract" to the extent your assumption of the tort liability is permitted by law. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.

Form CG 21 39, or similar limitation form, removes 9f above that allows for the HH/Indemnity agreement to be considered an “insured contract”

Upper Tier’s Insurance Company & Sub Limits

Recipe for Disaster: Some insurance companies are now imposing coverage reductions (sub limits) on upper tier contractors whose subcontractors insurance policies contain Third Party Action Over Exclusions/Limitations.

$1,000,000 Limit of Insurance for the Upper Tier (GC)

Subcontractors policy contains a Third Party Action Over Exclusions/Limitation

+ = Coverage Reduced on the Upper Tier’s (GC) Policy from $1,000,000 Down to a Sublimit of $250,000

Utah DOPL “New Rule”

R156-55a-302d. Qualifications for Licensure - Proof of Insurance and Registrations. In accordance with the provisions of Subsection 58-55-302(2)(b), an applicant who is approved for licensure shall submit proof of public liability insurance which provides coverage for the scope of work performed and in coverage amounts of at least $100,000 for each incident and $300,000 in total by means of a certificate of insurance naming the Division as a certificate holder.

R156-55a-501. Unprofessional Conduct. Such failure shall be considered by the Division and the Commission as grounds for immediate suspension of the contractors license; (2) failing to continuously maintain insurance and registration as required by Subsection 58-55-302(2) and Section R156-55a-302d; and (3) failing to within 30 days of a request from the Division to provide: (a) proof of insurance coverage; (b) a copy of the licensee's public insurance policy; or (c) any exclusions included in the licensee's public insurance policy.

Hold Harmless | Indemnification

Indemnification

INDEMNITY. TO THE FULLEST EXTENT PERMITTED BY LAW, THE SUBCONTRACTOR SHALL DEFEND, INDEMNIFY, AND HOLD HARMLESS CONTRACTOR, OWNER, THE PROJECT ARCHITECTS AND ENGINEERS, AND ALL OF THEIR AGENTS AND EMPLOYEES FROM AND AGAINST ALL CLAIMS, DAMAGES, LOSSES AND EXPENSES INCLUDING BUT NOT LIMITED TO ATTORNEY'S FEES, ARISING OUT OF OR RESULTING FROM THE PERFORMANCE OF THE SUBCONTRACTOR'S WORK UNDER THIS AGREEMENT, PROVIDED THAT ANY SUCH CLAIM, DAMAGE, LOSS OR EXPENSE IS ATTRIBUTABLE TO BODILY INJURY, SICKNESS, DISEASE, OR DEATH, OR TO INJURY TO OR DESTRUCTION OF TANGIBLE PROPERTY (INCLUDING THE WORK ITSELF) INCLUDING THE LOSS OF USE RESULTING THEREFROM TO THE EXTENT CAUSED IN WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF THE SUBCONTRACTOR OR ANYONE DIRECTLY EMPLOYED BY IT OR ANYONE FOR WHOSE ACTS SUBCONTRACTOR MAY BE LIABLE, REGARDLESS OF WHETHER IT IS CAUSED IN PART BY A PARTY INDEMNIFIED HEREUNDER. SUCH OBLIGATION SHALL NOT BE CONSTRUED TO NEGATE OR ABRIDGE, OR OTHERWISE REDUCE, ANY OTHER RIGHT OR OBLIGATION OF INDEMNITY WHICH WOULD OTHERWISE EXIST AS TO ANY PARTY OR PERSON DESCRIBED IN THIS PARAGRAPH.

Indemnification - UtahAn upper tier can’t (by statute) require the lower tier to indemnify the upper tier for damages that were caused by the upper tier.

Additional Insured

Endorsements – Additional Insured (Ongoing Operations)

Endorsements–Additional Insured (Completed Operations)

Endorsements–Additional Insured (Completed Operations)

• This endorsement is designed to protect the upper tier contractor for issues arising from the subs “completed operations” of the project, but only during the policy period (should be required through the Statute of Repose.)

• If not automatic, per terms of the contract, you likely need to be named – listed on the form.

Endorsed Combo BlanketCG 2010 11/85

20162015 2017 201820122011 2013 2014

AI Completed operations – Obtain each year through the Statute of Repose


Property Damage -

Occurrence

Claim is Made

Require in Agreement Additional Insured Completed Operations Endorsement AND Obtain/Collect the Endorsement Each Year Through the Statute of Repose

Priority of Coverage

• Primary and noncontributory is actually about the priority of insurance coverage—which policy will respond as primary insurance and which policy will respond as excess insurance. In other words, whose policy will be first and whose will be second.

• The Upper Tier wants the Lower Tier’s policy to respond first, and not pull in the Upper Tiers coverage until the Lower Tiers coverage is exhausted.

Endorsements – Primary & Non-Contributory

Endorsements – Waiver of Subrogation

COI Additional Info

No detailed coverage / exclusion Disclosure

Limit Per PROJECT

• Easily falsified (fraudulent).

• Doesn’t disclose coverage exclusions.

• Coverage could cancel the next day, week, month after receipt (Recommend requiring a 30-day notice of cancellation endorsement.)

• Additional Insured, Primary N/C, WOS can be listed but may not be valid w/o the appropriate endorsement.

• Limits shown may have been reduced by paid claims (per project aggregate “best practice” default.)

• Additional Insured status indicated on a COI may only be for ongoing operations, not completed operations.

• Additional Insured , Primary N/C, WOS status may not be valid without a properly written and executed subcontractor agreement addressing these issues (blanket/automatic.)

• Still required even though the information is very basic.

Recap - Layers of Protection

Certificate of Insurance

Legal Action Against Subcontractor – Cost money

Hold Harmless | Indemnification Agreement – Signed Prior to Work

Additional Insured (Ongoing / Completed Operations) 2013 Version

Additional Insured (Ongoing / Completed Operations) 2001 or 2004 Version

Hold Harmless | Indemnification is an “Insured Contract”

Waiver of Subrogation

Primary & Non-contributing

Sub Covered for Scope of Work – Lack of Exclusions

Liability Premium Basis• Premium is developed through applying a factor

rate percentage against an exposure (Rate X Exposure) – Gross Payroll– Gross Sales– Subcontracted Cost– Square footage/Acreage

• Auditable

Agent MisclassificationInsurance agent rated incorrectly

Rated as a subcontractor, but was

actually a general contractor.

Rated at $25,000 subbed

cost, should have been $200,000

They didn’t qualify for this program, and insurance company can deny any claims

Commercial Auto• Common Mistakes

– Too low of liability limits– Trailers (<2,000 GVW vs. >2,000 GVW)– Non-owned auto coverage– Hired auto coverage– Insurable interest– Drive other car coverage– Making small claims (eg: Glass claims)

Workers’ CompensationEvery state’s workers compensation law contains an exclusive remedy provision that stipulates that the benefits prescribed in the act are the sole remedy against the employer for covered injuries sustained on the job. (Most states allow suits against the employer if the employer has failed to either purchase workers compensation insurance or obtain authorization to self-insure as required by the law. See the discussion of penalties below.)Many states also allow suits against the employer when the injury was intentionally caused by the employer (Insurance = employer liability coverage). Under these circumstances, most states deprive employers of the normal common-law defenses (assumption of risk, fellow-servant liability, and contributory negligence) against such allegations. The majority of states also shield fellow employees of compliant employers from tort liability when their negligence results in an injury to another employee. A few specifically allow suits against a fellow employee when that employee intentionally caused the injury.

Exclusive Remedy

Do NOT pay for medical bills our of your own pocket – Waive your rights to Exclusive Remedy.

Are you covered for out of state jobs?Employers extra-territorial coverage and reciprocal agreements.

Extra-territorial coverage is defined as coverage extended to Utah employees who work outside of Utah for a temporary period. This coverage is available when a reciprocal agreement exists between Utah and another state. Reciprocal agreements vary by state and may have exclusions. These agreements allow a Utah

workers’ compensation policy to cover Utah based employees while temporarily working in another state. The Industrial Accidents Division issues extra-territorial certificates of insurance on a case by case basis, for a maximum of six months and is non-renewable. This certificate notifies the other state that Utah

has authorized the employer to temporarily work in that state.

California•Florida – limit 10 consecutive days or maximum of 25 days in a calendar year. See

www.flsenate.gov/Session/Bill/2011/723•Idaho

•Maryland•Montana ‐ excludes construction work. http://erd.dli.mt.gov/workers‐comp‐regulations/...

•Nevada – excludes construction work. For specific rules, please see:http://www.leg.state.nv.us/NRs/NRS‐616B.html#NRS616BSec600%20and

http://www.leg.state.nv.us/nrs/NRS‐624.html#NRS624Sec020•North Dakota

•Oregon•South Dakota

•Texas•Washington

•West Virginia•Wyoming ‐ Requires out of state employers to submit forms,

please go to:https://doe.state.wy.us/wyereg/or call 307‐777‐5476

Free Service

• Insurance Policy Audit –DOPL Compliance(Expert Opinion.)

• Better Coverage / Premium Savings.

• Contract Review.

HBA Member Benefits

• 5% off workers’ compensation premium (WCF-Summit).

• 9% off liability, auto, equipment, property insurance.

• Health Insurance (coming).

• Free Continuing Education.

• Free Human Resource portal w/1000’s of forms, policies, documents.

• Free HR Help Desk-limited.

• Political Representation: HBA supports your business/industry.

• Networking

• Many other discounted services & products.

www.SLHBA.com

Certificate Project

Lawyer Contract SettlementOops

Residential Exclusion

Requester Submitter Agent Insurance Company

Time Court

Risk Transfer AgreementLoss Control

Underwriter

Certificate

Endorsements

ExclusionDisclosures

Risk Transfer Agreement

Requester SubmitterAgent

UnderwriterLoss Control

Lawyer

Auditor

• Organized by line of coverage.• Custom requirements. • Easy to create and manage

templates.

• Defaults to “Best Practices.”• Easy to enter custom

requirements.• Explanations provided. • Prohibited Exclusions /

Coverage Limitations• Submitter’s insurance agent

views a similar screen to understand requirements & upload documents.

Upload a Certificate of Insurance that meets the following requirements:

We don’t provide this line of coverage

Upload

Insurance Company Requirements


Endorsements

Waiver of Subrogation Endorsement

Additional Insured Form (Ongoing Operations)

Additional Insured Form (Completed Operations)

Primary and Non Contributory

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Exclusions / Limitations

Residential Construction Exclusion

Condominium Construction Exclusion

Apartment Construction Exclusion

Town Home and Town House Construction Exclusion

Multi‐Family Construction Exclusion

Upload View

Upload Required Endorsements:

Upload Exclusion / Limitation Endorsement if contained in the policy:

Comments

Document Upload

Insurance Company Requirements


Endorsements

Waiver of Subrogation Endorsement

Additional Insured Form (Ongoing Operations)

Additional Insured Form (Completed Operations)

Primary and Non Contributory

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Exclusions / Limitations

Residential Construction Exclusion

Condominium Construction Exclusion

Apartment Construction Exclusion

Town Home and Town House Construction Exclusion

Multi‐Family Construction Exclusion

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Upload Required Endorsements:

Upload Exclusion / Limitation Endorsement if contained in the policy:

• Data is archived indefinitely.• Instantly access coverage

verification from anywhere, anytime.

• Simplifies insurance audits.• Can grant access to insurance

company representatives.

• Requester pays• $249* Annual subscription.

• $2.99 per coverage verification request.

*Pricing reflects referral discounts.

Optional Monitoring • $19.99annual subscription.

• .20 per submitter per month.

• Billed monthly based upon number of submitters monitored.

• Can be monitored Semiannually, Quarterly, or Monthly.

• Includes electronic signature feature (document management).

• Contracts are archived indefinitely.

• Insurance company can be granted access to view executed contracts.

• Document management tool (electronic signature, storage, insurance company access).• $49 per year. Unlimited users, documents, and signers

• The GotMySafety Mobile App is available for Android and iOS.

• Currently provides mobile training and site inspection functions.

• More functions coming in the future. • Driver safety tracking.

• Daily incident log.

• OSHA logs.

• Company Admin establishes inspection requirements.

• Supervisors are reminded to complete inspection through the app.

• Problems are immediately documented with photos.

• Notifies upper tier where applicable.

• 250+ training topics.

• Audio in English and Spanish.

• Interactive discussion questions.

• Companies can upload custom training topics.

• Supervisor checks off crew members in attendance.

• Each crew member can sign or the supervisor can take a picture of attendees.

• Metadata is recorded, including date, time, location, etc.

• Manage employees.• Upload all employees at once

by CSV.

• Track employee data in one place.

• Establish as many crews as needed.

• Employees can be on more than one crew.

• Supervisors can manage more than one crew.

• Establish inspection requirements for any site.

• Assign inspection requirements.

• Create custom inspections.• Set frequency.

• Upload custom safety content (audio and text) as well as inspection forms.

• Insurance company may be invited to monitor compliance.

• Upper tier contractors may be invited to monitor compliance

• Notifications automatically sent when requirements or training aren’t completed.

Free Tool

Contact

[email protected]

[email protected]

Contractor Insurance & Risk Transfer

Documents

Transcript of Contractor Insurance & Risk Transfer