CONTENTS RISK MANAGEMENT S REFERENCE LIBRARY

Transcription

1 LIBRARY RISK MANAGEMENT S REFERENCE CONTENTS PAGE CONTENTS Q.I.1 Q.I.2 Q.II.1 Q.II.2 Q.III Q.IV.1 - Q.IV.8 Q.V Q.VI - Q.XX JOINT VENTURE INSURANCE IMPLICATIONS LIQUOR LIABIILTY LOSS EXPOSURE & INSURANCE FIDUCIARY INSURANCE EXPOSURE SPECIAL EVENT INSURANCE & CHECKLIST SECTIONS RESERVED FOR FUTURE USE Q

2 JOINT VENTURE INSURANCE IMPLICATIONS JOINT VENTURE INSURANCE IMPLICATIONS COMMERCIAL GENERAL LIABILITY (CGL): * Joint Ventures are not automatically insured under the newly acquired or formed organization provision as provided under Who Is an Insured section of a General Partner s CGL. * Joint Ventures MUST be listed as a Named Insured on the Declaration Page of one of the General Partner s CGL. An Additional Insured clause is not effective nor appropriate to provide similar protection for the Joint Venture due to contractually liability exclusions with Insured Contracts, Part F and differences between definitions of Insured - Automatic Insured - Nonautomatic Insured and Named insured. * Current or Past Joint Ventures, which are not declared on the Declaration Page are not insured under the current CGL policy in effect. * The Joint Venture MUST be endorsed to one of the existing General Partner s CGL as a Named Insured and remain in that status at least 5 years (referred to hereafter as a JV Extension Period ) or longer depending on the scope of work. This is in lieu of the Joint Venture dissolving after the project is complete. Without this extended condition, once the Joint Venture dissolves and the insurance coverage is requested canceled, no protection will apply if injury or damage takes place after the policy expires or is canceled. This is because of the fact any current CGL in effect states that: No person or organization is an insured with respect to the conduct of any current or past partnership or joint venture that is not shown as Named Insured in the Declarations. * When a JV Extension Period exists and the General Partner providing the CGL coverage replaces the policy with a new insurer, the new insurer MUST endorse the new CGL policy with the past Joint Venture as a Named Insured to provide continued protection during the JV Extension Period as determined by the County. * The County will not accept a Joint Venture listed as only a Certificate Holder or Additional Insured only. Q.I.1

3 JOINT VENTURE INSURANCE IMPLICATIONS BUSINESS AUTO LIABILITY (BA): * Who is an Insured is much more liberal and ambiguous under the Commercial BA policy and the Joint Venture issue is not as much as a problem. * The Joint Venture MUST only be named as an Additional Insured under the BA policy for each of the General Partners making up the Joint Venture. * The County will accept a certificate of insurance evidencing the Additional Insured status of the Joint Venture from all General Partners involved. WORKER S COMPENSATION (WC): * The Joint Ventures pose the same implications to the project owner with subcontracted work as would any other legal entity. There are little problems when the Joint Venture exclusively, without exception, subcontracts work back to the General Partners only and each General Partner maintains a WC policy; or if the General Partners subcontract to other entities and each General Partner maintains a WC policy. * An exposure exists to the County if the Joint Venture does not have a WC policy and subcontracts to an entity other than one of the General Partners and that subcontractor does not maintain a WC policy. The County most likely would be held responsible of injuries sustained by the subcontractor s employees. * If the Joint Venture is owned 50/50 (or any other equitable distribution), between the General Partners then the Joint Venture itself must maintain WC insurance in lieu of the General Partners maintaining any similar coverage. This protects the County from the foregoing exposure. * If the Joint Venture has a General Partner as a majority owner (51% or more) then that General Partner may endorse his/her existing WC policy with the name of the Joint Venture to provide protection for all parties involved. * The County will not accept a Joint Venture that is not providing WC insurance from some source. Q.I.2

4 LIBRARY : RISK MANAGEMENT S REFERENCE LIQUOR LIABILITY LOSS EXPOSURE & INSURANCE LIQUOR LIABILITY Most insureds (vendors, tenants or contractors) will maintain liability coverage under the Commercial General Liability (CGL) policy. The CGL includes a Liquor Liability exclusion, which is targeted at those insureds in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. The exclusion specifically attempts to eliminate liability arising from: 1) for causing or contributing to the intoxication of any person; 2) for furnishing alcohol beverages to a person under legal drinking age; 3) for furnishing alcohol to a person under the influence of alcohol; and/or 4) for violation of any statute, ordinance, or regulation relating to the sale, gift, distribution, or use of alcoholic beverages (IE Dram Shop Acts or Alcoholic Beverage Control Acts) The effectiveness of the exclusion hinges on the plain meaning and interpretation of the phrase in the business of. Unfortunately, the word business is not specifically defined in the insurance policy and as a result interpretation problems ensue for the insurers and insureds alike. The New Hampshire supreme court, in Laconia Rod & Gun Club v. Hartford Accident and Indemnity Company, 459 A.2d249(1983), held the word business means any regular activity that occupies one s time and attention, with or without a direct motive. In the legal narrow sense it means an activity with a direct profit motive; however, one should still remain cautious with the term without a direct motive. By way of an implied exception to the Liquor Liability exclusion, an insured who is not in the business of manufacturing, distributing, selling, or furnishing alcoholic beverages, would be afforded protection under the CGL policy for Liquor Liability claims under Host Liquor Liability coverage. The Host Liquor Liability coverage is relied upon frequently to treat most incidental uses of liquor by an organization; however, when any of the following conditions exist, a potential Liquor Liability exposure is created beyond what may have been contemplated in providing coverage under the Host Liquor Liability coverage: 1) The business mission is accomplished, in whole or in part, by the manufacturing, selling, or distributing of alcoholic beverages; 2) A liquor license is required, whether maintained or not; 3) A liquor permit is required for the activity, whether maintained or not; Q.II.1

5 RISK MANAGEMENT S REFERENCE LIBRARY LIQUOR LIABILITY LOSS EXPOSURE & INSURANCE 4) Liquor is served, without or without a charge, to the general public; 5) Liquor is served as a means of generating revenue for a fund raising event; 6) Liquor is served by a third-party contracted by the insured for any of the foregoing reasons mentioned above; and/or 7) Liquor is offered for the purpose of financial gain or livelihood. RISK CONTROL TECHNIQUES: Some common Risk Control techniques, but not limited to, for treating the liquor liability exposure are: 1) Avoidance - by prohibiting the use thereof without exception; and/or. 2) Loss Control - develop internal policies and procedures on the when, where, how, why and what types of events and uses of alcohol including types and amounts. The organization should always make a concerted effort to reduce the frequency and severity of potential liquor liability claims. RISK FINANCING TECHNIQUES: Some Risk Financing techniques available, but not limited to, in effectively treating the liquor liability exposure are: 1) Indemnification/Hold Harmless agreement creating an insured contract; 2) Listed as an Additional Insured on the insured s CGL policy; 3) Require Liquor Legal Liability coverage to be specifically maintained and be listed as an Additional Insured on the liquor policy in addition to the CGL policy; and/or 4) Require the CGL policy to list your organization as an Additional Insured and be endorsed with a CG 2151 Amendment of Liquor Liability Exclusion - Exception for Scheduled Activities to buy back the Liquor Liability exclusion for a specific event(s). CONCLUSION: The Liquor Liability exposure is a challenging loss exposure to manage. Every scenario warrants careful analysis and identification of potential hazards, which may increase the likelihood of a Liquor Liability claim. Liability may be directly, contingently, contractually, or vicariously imputed on an organization. It is often recommended that combinations of both Risk Control & Risk Financing techniques be utilized to avoid gaps and establish a comprehensive approach to the effective treatment of the Liquor Liability exposure. Q.II.2

6 RISK MANAGEMENT S REFERENCE LIBRARY LIQUOR LIABILITY LOSS EXPOSURE & INSURANCE Whatever approach an organization chooses to implement, it is strongly suggested advice from legal council, risk management, and administration be solicited to ensure a successful and welldeveloped program. Q.II.3

7 FIDUCIARY INSURANCE EXPOSURE FIDUCIARY LIABILITY INSURANCE AREAS OF CONCERN 1. Failure to disclose required information or making misleading representations to participants of beneficiaries. 2. Failing to meet statutory funding requirements applicable to a pension plan. 3. Failure to monitor the done for the plan by service providers. 4. The payment of excessive fees to service providers. 5. Failure to recognize a conflict of interest when making a decision concerning the plan. 6. Making imprudent investment decisions. 7. Failure to meet regulatory and filing requirements. 8. Engaging in prohibited transactions. 9. Violation of the employee s and/or beneficiary s civil rights due to discrimination. 10. Negligent retention of a fiduciary consultant, independent investment manager, administration firm (TPA), accounting firm, law firm, or custodian bank. Fiduciary Liability insurance provides coverage for loss that the insured becomes legally liable to pay because of claims made against the insured for a Wrongful Act or Breech of Fiduciary Duty. The insured includes the pension plan or board, the sponsoring employer who is responsible for such plan, any trustee of such plan and any employee or volunteer of such plan or the sponsoring employer. Wrongful Act includes the negligent act, error, or omission of the insured in the administration of the plan. Local government pension plans are subject to Chapters 112, 119, 175 and 185 of the Florida Statutes, as well as other applicable State and Federal Laws. Florida Statute requires that a fiduciary shall discharge his or her duties with respect to a plan solely in the interest of the participants and beneficiaries. A fiduciary includes any officer, trustee, and custodian (and any counsel, accountant, and actuary who is employed on a full time basis). Furthermore, Florida Statute allows plans to purchase insurance to cover liability incurred by reason of act or omission of the fiduciary. A fiduciary can be held liable for the acts of a co-fiduciary arising out of the acts of various organizations that provide services to the plan. These can include consulting firms, administrative firms, investment managers, accounting firms, law firms...etc. Thus, a fiduciary could become responsible for the selection of these individuals. Q.III

8 This Additional Insured endorsement provides the City the broadest coverage available under insurance. It covers the City for liability arising out of the Insured s Operations or Premises. The arising out of wording often offers sole negligence coverage on behalf of the City, and the wording operations covers on-going as well as completed operations exposures. This endorsement is appropriate and often available for City service, consulting, and maintenance type contracts. CG ADDITIONAL INSURED - DESIGNATED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Name of Person or Organization: (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement) Who Is An Insured (Section II) is amended to include as an insured the person or organization shown in the Schedule as an insured but only with respect to liability arising out of your operations or premises owned by or rented to you. Copyright, Insurance Services Office, Ins Q.IV.1

9 This Additional Insured endorsement provides the City the second broadest coverage available under insurance. It covers the City against liability arising out of the Insured s on-going operations performed for the City. The arising out of wording often offers sole negligence coverage on behalf of the City; however, the wording on-going operations limits coverage to on-going work or services performed, specifically excluding liability arising out of completed operation exposures. This endorsement is appropriate and often available for City construction contracts. CG ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTORS - SCHEDULE PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement.) Who Is An Insured (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of your ongoing operations performed for that insured. Copyright, Insurance Services Office, Ins Q.IV.2

10 This Additional Insured endorsement provides the City very broad coverage under lease agreements. It covers the City for liability arising out of the Lessee s ownership, maintenance, or use of that part of the premises leased from the City. The arising out of wording often offers sole negligence coverage on behalf of the City; however, the coverage is limited to liability arising out of the location leased and identified in the endorsement. This endorsement is appropriate and often available for real property lease and concessionaire agreements. CG ADDITIONAL INSURED - MANAGERS OR LESSORS OF PREMISES This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE 1. Designation of Premises (Part Leased to You): 2. Name of Person or Organization (Additional Insured): 3. Additional Premium: (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement) Who Is An Insured (Section II) is amended to include as an insured the person or organization shown in the Schedule but only with respect to liability arising out of the ownership, maintenance, or use of that part of the premises leased to you and shown in the Schedule and subject to the following additional exclusions: This insurance does not apply to: 1. Any occurrence which takes place after you cease to be a tenant in that premises. Q.IV.3

11 2. Structural alterations, new construction or demolition operations performed by or on behalf of the person or organization shown in the Schedule. Copyright, Insurance Services Office, Ins This Additional Insured endorsement provides the City very broad coverage under permits and license activities. It covers the City for liability arising out of the Insured s permitted or licensed operations performed or performed on the Insured s behalf. The coverage, however, excludes work performed for the City or liability arising out of products or completed operations exposures. This endorsement is appropriate and often available for City permit and license agreements. CG ADDITIONAL INSURED STATE OR POLITICAL SUBDIVISIONS - PERMITS This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE State or Political Subdivision: (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement) Who Is An Insured (Section II) is amended to include as an insured any state or political subdivision shown in the Schedule, subject to the following provisions: 1. This insurance applies only with respect to operations performed by you or on your behalf for which the state or political subdivision has issued a Q.IV.4

12 permit. 2. This insurance does not apply to: a. Bodily Injury, Property Damage, personal injury or advertising injury arising out of operations performed for the state or municipality, or b. Bodily Injury or Property Damage included within the productscompleted operations hazard. Copyright, Insurance Services Office, Ins This Additional Insured endorsement provides the City very broad coverage under permits and license agreements. It covers the City for liability arising out of specific permitted hazards on the Insured s owned, rented or leased premises. The coverage only applies to the hazards identified in the endorsement that require permitting. This endorsement is appropriate and often available for City permit agreements. CG ADDITIONAL INSURED STATE OR POLITICAL SUBDIVISIONS - PERMITS RELATING TO PREMISES This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE State or Political Subdivision: (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement) Who Is An Insured (Section II) is amended to include as an insured any state or political subdivision shown in the Schedule, subject to the following provisions: Q.IV.5

13 This insurance applies only with respect to the following hazards for which the state or political subdivision has issued a permit in connection with premises you own, rent, or control and to which this insurance applies: 1. The existence, maintenance, repair, construction, erection, or removal of advertising signs, awnings, canopies, cellar entrances, coal holes, driveways, manholes, marquees, hoist-away openings, sidewalk vaults, street banners, or decorations and similar exposures; or 2. The construction, erection, or removal of elevators; or 3. The ownership, maintenance, or use of any elevators covered by this insurance. Copyright, Insurance Services Office, Ins This Additional Insured endorsement is often used in construction related contracts. It provides the City coverage for liability arising out of on-going operations of a contractor as well as the City s negligent supervision of the contractor. Unless required by the City s construction contract, this endorsement excludes sole negligence of the City as well as completed operations exposures for the City. This endorsement is appropriate for City construction contracts, if Additional Insured Owners, Lessees or Contractors Schedule Person or Organization is not required or available. ADDITIONAL INSURED - OWNERS, LESSEES, OR CONTRACTORS - SCHEDULED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Palm Beach County Board of County Commissioners (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement) A. Who Is An Insured (Section II) is amended to include as an insured the person or organization (called additional insured ) shown in the Schedule but only with respect to liability arising out of: 1. Your ongoing operations performed for the additional insured(s) at the location designated above; or 2. Acts or omissions of the additional insured(s) in connection with their general supervision of such operations. B. With respect to the insurance afforded these additional insureds, the following additional provisions apply: Q.IV.6

14 Except when required otherwise by contract, this insurance does not apply to: a. Bodily Injury or property damage occurring after: (1) All work, including materials, parts or equipment furnished in connection with such work, on the project (other than service, maintenance, or repairs) to be performed by or on behalf of the additional insured(s) at the site of the covered operations has been completed; or (2) That portion of your work out of which the injury or damage arises has been put to its intended use by an person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project. b. Bodily Injury or property damage arising out of any act or omission of the Additional Insured(s) or any of their employees, other than the general supervision by the additional insured(s) of your ongoing operations performed for the Additional Insured(s). ALTERNATIVE EMPLOYER ENDORSEMENT (WC ) This endorsement applies only with respect to bodily injury to your employee while in the course of special or temporary employment by the alternative employer in the state named in Item 2 of the Schedule. Part One (Workers Compensation Insurance) and Part Two (Employers Liability Insurance will apply as though the alternative employer is insured. If an entry is shown in Item # of the Schedule, the insurance afforded by this endorsement applies only to work you perform under the contract or at the project named in the Schedule. Under Part One (Workers Compensation Insurance) we will reimburse the alternative employer for the benefits required by the workers compensation law if we are not permitted to pay the benefits directly to the persons entitled to them. The insurance afforded by this endorsement is not intended to satisfy the alternative employer s duty to secure its obligations under the workers compensation law. We will not file evidence of this insurance on behalf of the alternative employer with any government agency. Q.IV.7

15 We will not ask any insurer of the alternative employer to share with us a loss covered by this endorsement. Premium will be charged for your employees while in the course of special or temporary employment by the alternative employer. The policy may be canceled according to its terms without sending notice to the alternative employer. Part Four (Your Duties If Injury Occurs) applies to you and the alternative employer. The alternative employer will recognize our right to defend under Parts One and Two and our right to inspect under Part Six. Source: Alternative Employer Endorsement (WC ) National Council On Compensation Insurance, Designated Insured Endorsement (CA 2048) Each person or organization indicated above is an insured for Liability coverage, but only to the extent that person or organization Q.IV.8

16 qualifies as a insured under Who is An Insured provision contained in SECTION II of the Coverage Form. Copyright, Insurance Services Office, Ins Q.IV.9

17 SPECIAL EVENT INSURANCE & CHECKLIST SPECIAL EVENT INSURANCE REQUIREMENTS MINIMUM LIMITS OF LIABILITY: ( ) General Aggregate Limit $1,000,000 ( ) Products/Completed Operations Aggregate Limit $1,000,000 ( ) Each Occurrence Limit $1,000,000 ADDITIONAL INSURANCE WHEN APPLICABLE OR REQUEST BY RISK MANGEMENT: ( ) Liquor Liability $1,000,000 ( ) Watercraft Liability $1,000,000 ( ) Participant Liability $1,000,000 ( ) Owned, Hired, Nonowned Auto Liability $1,000,000 ( ) Workers Compensation Statutory Limits ( ) Vendors as Additional Insureds Endorsement ( ) Idemnification/Hold Harmelss Agreement Contractual ( ) Waiver of liability/covenant not to sue Contractual ( ) Other: $ ADDITIONAL CONDITIONS OR TERMS * All insurance required, except Workers Compensation, shall name Palm Beach County Board of Commissioners, A Political Subdivion of the State of Florida, its Officers, Agents, & Employees as Additional Insured. * Certificate of Insurance shall (1) name Palm Beach County, Parks & Recreation - Special Events, th Avenue South, Lake Worth, FL as certificate holder, (2) identify the County as Additional Insured in the Special Items section; and (3) provide a thirty (30) day notice of cancellation. * The Parks & Recreation Department along with the Risk Management Department reserves the right to modify insurance requirements on a per event basis. * The event organizer is responsible for obtaining and submitting all Certificates of Insurance or other required documentation to Special Events no later than 20 days prior to the event set up date. * Organizer is responsible for all associated sales tax, licenses, or permits associated with the event. * See Reverse side for Request for Waiver of Insurance Requirements to be submitted and approved by Risk Managment. Fax Attn: Bill Mason, CPCU, Casualty Self Insurance Dept. Q.V