Panel 4 Insurance, Materials. Table of Contents

Transcription

1 Panel 4 Insurance, Materials Table of Contents Limitations on the Use of Wrap-Up Insurance when a State, a Municipality or Other Public Entity Commissions or Conducts a Construction Project New York Construction Certificate of Liability Insurance Addendum

2 LIMITATIONS ON THE USE OF WRAP-UP INSURANCE WHEN A STATE, A MUNICIPALITY OR OTHER PUBLIC ENTITY COMMISSIONS OR CONDUCTS A CONSTRUCTION PROJECT SUMMARY STATE NO STATUTORY PROHIBITION BLANKET STATUTORY PROHIBITION PARTIAL STATUTORY PROHIBITION SOME PUBLIC ENTITIES ONLY PERMITTED PROHIBITION BASE ON SIZE OF PROJECT CALIFORNIA CONNECTICUT FLORIDA GEORGIA ILLINOIS MASSACHUSETTS NEW JERSEY NEW YORK MARYLAND TEXAS 1

3 TEN-STATE ANALYSIS STATE LIMITATIONS ON THE USE OF WRAP-UP INSURANCE CALIFORNIA Relevant source: Calif. Govt. Code Owner-controlled or wrap-up insurance is defined as a series of insurance policies issued to cover all of the contractors and subcontractors on a given project for purposes of general liability and workers' compensation. State and local government agencies (other than an agency created by compact with another state) are prohibited from requiring bidder to obtain surety with respect to any public building or construction contract, with the following exceptions and qualifications: A state or local governmental agency may use owner-controlled or wrap-up insurance with regard to a construction or renovation program for which the total cost exceeds $50 million if the agency certifies it meets all of the following conditions: 1. Bidders meet minimum occupational safety and health qualifications, based on following factors: presence of any serious and willful violations of specified provisions of Labor Code during past 5 yrs.; workers comp experience; and injury prevention programs. 2. The use of owner-controlled or wrap-up insurance will minimize the expenditure of public funds on the project. 3. The program maintains completed-operation coverage for a term (not less than 3 yrs.) for which such coverage is reasonably commercially available as determined by the Insurance Commissioner. 4. Bid specifications clearly specify for all bidders the insurance coverage provided under the program and minimum safety requirements that must be met. 5. The program does not prohibit a contractor or subcontractor from purchasing any additional insurance coverage that a contractor or subcontractor believes is necessary to protect from any liability arising out of the contract. 6. The program does not include surety insurance. School or community college district may use owner-controlled or wrap-up insurance if district determines the presence of items 1-2 above. Such coverage must also meet the criteria of items 3-6. A state agency may utilize owner-controlled or wrap-up insurance programs if all of the following conditions are met: 1. Total cost of public works project is over $125 million 2

4 STATE CONNECTICUT LIMITATIONS ON THE USE OF WRAP-UP INSURANCE 2. Items 3-6 above are present. Relevant source: Conn. Gen. Stat. Ann (e) "Owner-controlled insurance program" is defined as an insurance procurement program under which a principal provides and consolidates insurance coverage for one or more contractors on one or more construction projects. Contracts for the construction, alteration or repair of any public building or public work of the state or a municipality may not include a provision that allows or requires the state or municipality to maintain an ownercontrolled insurance program. The exceptions are: 1. Projects approved pursuant to Conn. Gen. Stat. 10a- 109e (UConn 2000 Infrastructure Improvement Program) 2. One or more municipal projects totaling one hundred million dollars under the supervision of one construction manager or located within the boundaries of a municipality if under the supervision of more than one construction manager. Each contract or policy of insurance issued under an ownercontrolled insurance program pursuant to these exceptions shall provide that: 1. Coverage for work performed and materials furnished shall continue from the date of completion until the date all causes of action are barred under any applicable statute of limitations. 2. Any notice of a change in coverage under the contract or policy or of a cancellation or refusal to renew the coverage under the contract or policy shall be provided to the principal and all contractors covered under the program. 3. The effective date of a change in coverage under the contract or policy shall be at least thirty days after the date the principal and contractors receive the notice of change in coverage as required. The effective date of a cancellation or refusal to renew shall be at least sixty days after the principal and contractors receive the notice of change in coverage as required. Each principal or contractor shall disclose in the project plans or specifications at the time the principal or contractor is soliciting bids for the construction project that the project will be covered by an owner-controlled insurance program. 3

5 FLORIDA Relevant source: Fla. Stat. Ann "Owner-controlled insurance program" is defined as a consolidated insurance program or series of insurance policies issued to a public agency that may provide one or more types of insurance coverage for any contractor or subcontractor working at specified or multiple contracted work sites of a public construction project. A state agency, political subdivision, state university, community college, airport authority or other public agency in this state, or any instrumentality thereof, may purchase an owner-controlled insurance program in connection with a public construction project only if it is determined necessary, in the best interest of the public agency and all of the following conditions are met: The estimated total cost of the project is: 1. $75 million or more; 2. $30 million or more if the project is for the construction or renovation of two or more public schools during a fiscal year; or 3. $10 million or more, if the project is for the construction or renovation of one public school, regardless of whether the project s duration extends beyond a fiscal year. The program maintains completed operations insurance coverage for a term during which the coverage is reasonably commercially available, as determined by the public agency, but for no less than 10 years. The bid or proposal specifications for the project clearly specify, for all bidders or proposers, the insurance coverage provided under the program and the minimum safety requirements that must be met. The contractor or subcontractor is not prohibited from purchasing additional insurance coverage that the contractor or subcontractor believes is necessary for protection against any liability arising out of the contract. The cost of the additional insurance must be disclosed to the public agency. The program does not include surety insurance. The public agency may only purchase an owner-controlled insurance policy that has a deductible or self-insured retention if the deductible or self-insured retention does not exceed $1 million per occurrence. Contractors and subcontractors performing work under a construction project insured by an owner-controlled insurance program are not required to individually satisfy eligibility requirements for large deductible workers compensation rating plans, and may combine their payrolls for workers compensation coverage as long as the minimum deductible for the construction project is $100,000 or more and the standard estimated premium for the construction 4

6 projects is $500,000 or more. The public agency is responsible for payment of the applicable deductibles of all claims. The construction of a single agency service, system, facility or other public work may not be combined with the construction of another public agency service, system, facility or other public work to satisfy the $75 million requirement, unless the multiple services, systems, facilities or other public works are part of a capital infrastructure improvement program that will be performed under a single prime contract or an interrelated capital infrastructure improvement program that interconnects the housing or transportation of persons or cargo arriving via an airport or seaport with the combined estimated costs of the construction projects to exceed $125 million. The following projects are exempted completely: any Dept. of Transportation project authorized under ; any existing project subject of an on-going, owner-controlled insurance program issued before Oct. 1, 2004; any public agency project advertised by the public agency before Oct. 1, 2004 for the purpose of receiving bids or proposals for the project; and any public agency project which are committed to an ongoing, owner-controlled insurance program issued before Oct. 1, GEORGIA ILLINOIS No explicit limitations. The City of Atlanta contracted with two joint ventures to build an international terminal at the Hartsfield Jackson Atlanta International Airport. The contract included a provision that the City would procure and maintain the insurance policies and the parties agreed to employ a preexisting program administered by the City known as Owner s Controlled Insurance Program. Estate of Pitts v. City of Atlanta, 312 Ga. App. 599, 719 S.E.2d 7, 9 (2011) vacated sub nom. Archer W. Contractors, Ltd. v. Estate of Pitts, 292 Ga. 219, 735 S.E.2d 772 (2012) and vacated, 323 Ga. App. 70, 746 S.E.2d 698 (2013). No explicit limitations. The following documents indicate that governments can enter into or use wrap-up or owner controlled insurance programs. Illinois Tollway Request for Proposal - Insurance Broker Services for Owner Controlled Insurance Program 1. The Illinois State Toll Highway Authority (Tollway) is described as an instrumentality and agency of the State of Illinois. June 1999 General Accounting Office Report on Advantages and Disadvantages of Wrap-up Insurance for Large Construction Projects 1. The report describes the use of Wrap-up insurance for 5

7 several transportation projects, including the Chicago Transit Authority's (CTA) rehabilitation of Green Line beginning in 1994 which utilized a wrap-up program. The CTA is an independent authority created under IL law. MASSACHUSETTS NEW JERSEY No explicit limitations. The following documents indicate that governments can enter into or use wrap-up or owner controlled insurance programs. June 1999 General Accounting Office Report on Advantages and Disadvantages of Wrap-up Insurance for Large Construction Projects 1. The report describes the use of Wrap-up insurance for several transportation projects, including Boston Central Artery Project. MA had experience with it wrap-ups on other projects. No explicit limitations. Wrap-up insurance permitted for school facility projects: N.J. Stat. Ann. 18A:7G-44 The development authority may require wrap-up insurance coverage for any school facilities project in which the state has a 100% share and shall establish the coverage terms and requirements. For any school facilities project in which the State has less than 100% share, the district may elect to purchase wrap-up insurance coverage on its own or enter into a joint purchasing agreement with one or more other districts to purchase coverage. Wrap-up insurance coverage means a single insurance and loss control program for all parties involved in the school facilities project; and may include, but not limited to, workers compensation and employers liability, commercial general liability, umbrella/excess liability, builder s risk, architects and engineers errors and omissions, liability, environmental liability and force majeure. NEW YORK Relevant source: NY Ins. Law Wrap-up insurance contracts for public construction contracts are prohibited unless the project falls within one of the exceptions: The public corporation or public authority was created pursuant to agreement or compact with another state; or The project involves the construction of electrical generating and transmission facilities or construction, extensions and additions of light rail or heavy rapid transit and commuter railroads (such as those involving the MTA and Port Authority). 6

8 MARYLAND No explicit limitations. Wrap-up insurance or similar concepts not expressly addressed. State s provisions on required security for public construction projects (i.e., its Little Miller Act) expressly preserve a public body s authority to require performance security in addition to that specified in the Act. Little Miller Act (Md. State Fin. and Procurement Code Tit. 17, Subtit. 1). TEXAS Relevant source: Tax. Gov t Code Ann No limitations; a county may use the proceeds of bonds or certificates of obligation issued to pay for a county construction project to pay for an owner-controlled insurance program under which the county establishes and administers a consolidated insurance program for the project if the county s order authorizing the issuance of the bonds or other certificates of obligation authorizes the establishment of the program. 7

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