Northgate Link Extension Light Rail Project · 4 Northgate Link Extension Light Rail Project...
Transcript of Northgate Link Extension Light Rail Project · 4 Northgate Link Extension Light Rail Project...
1
Presented by
Sound Transit Risk Management Division
Owner Controlled Insurance Program (OCIP)
Northgate Link Extension Light Rail Project
2
Northgate Link Extension Light Rail Project
What is an Owner Controlled Insurance Program (OCIP)? An OCIP is a controlled insurance program that insures:
• Sound Transit, • University of Washington, • General Contractors, • Enrolled Subcontractors, and • Other designated parties,
for Work performed at the Project Site and designated off-site activities associated with the project (if any).
3
Improved Safety
Performance Greater
Claims Management Control
Increased M/W/DBE
Participation
Reduced Loss Litigation
Improved Cash Flow
Dedicated Products & Completed Operations Coverage
Better Coverage Terms &
Conditions
Higher Limits
OCIP BENEFITS
4
Northgate Link Extension Light Rail Project
Advantages • The Northgate Link Extension OCIP is a “project-specific” OCIP • Complies w/ UW Contract Requirements (ST/UW MOA and MIA) • Provides dedicated limits of insurance for large projects • Removes gaps in insurance coverage, e.g. Builders Risk • Coordinates loss control and claim process (control political risk) • Improves risk management of multiple Contractors/Subcontractors • Provides potential cost savings over traditional insurance
5
Northgate Link Extension Light Rail Project
Disadvantages OCIP management reporting may result in additional administrative burden • OCIP Insurance Cost Worksheet (Pre-Award) and Change Orders • OCIP Insurance Application • OCIP Enrollment • OCIP Insurance Deduct Audits • Claim Reviews (including claim investigation support, etc.)
6
Northgate Link Extension Light Rail Project
Central Link OCIP & U-Link OCIP - Lessons Learned
Northgate Link Extension OCIP Improvements Made
• Comprehensive OCIP Insurance Manual
• Pre-Bid & Pre-Con Orientation
• Contractor Claim Deductible Responsibility
• Insurance Claims Adjustment Procedures
• Contract Enforcement & Contractor Cooperation
• On-Site OCIP Administration Representative
7
Who is Covered? • Sound Transit’s interest in project(s) • University of Washington’s interests • Additional Insureds as required by agreements • Contractors who have:
– been awarded contract/subcontract work; – met the enrollment requirements; and – been issued a Certificate of Insurance.
Northgate Link Extension Light Rail Project
8
Northgate Link Extension Light Rail Project
Who is NOT Covered? • Parties not involved in day-to-day construction activities
– Examples include:
Contract Haulers or Truckers Vendors, Suppliers Architects & Engineers Other Professional Services firms Hazardous materials remediation contractors
9
Sound Transit Furnished OCIP Insurance • Primary Commercial General Liability (CGL)
– Westchester - $1M/Occ - $2M Agg – Includes Stop-Gap Employers Liability
• Excess Liability
– 9 Excess Layers = $100M Limit Tower of Coverage • Builders Risk
– ACE / Munich Re / Hiscox / XL - $400M/Occ - $400M Agg
• Contractors Pollution Liability – Illinois Union (ACE) - $50M/Occ - $50M Agg
Refer to OCIP Insurance Manual for more detailed description of OCIP coverages.
Northgate Link Extension Light Rail Project
10
Contractor Responsibility for Deductibles/Self-Insured Retentions • Commercial General Liability - $100,000 per Occurrence
• Builders Risk - First $250,000 per Occurrence
• Contractors Pollution Liability - $250,000 per Occurrence
Northgate Link Extension Light Rail Project
11
Northgate Link Extension Light Rail Project
Contractor Furnished Insurance • Automobile Liability
– $1M Combined Single Limit
• Workers’ Compensation and Employers Liability – Workers’ Compensation - Statutory in Washington State – Stop-Gap Employers Liability - $1M
• Commercial General Liability and Excess/Umbrella Liability – $1M/Occ & $2M Agg
Enrolled Contractors and Subcontractors must provide current Certificates of Insurance to Sound Transit through OCIP Administration Representative.
12
Northgate Link Extension Light Rail Project
OCIP Insurance Manual
• Your reference for all OCIP protocols and procedures
• Defines program requirements
• Lists OCIP insurance coverages
• Includes forms with explanations
• Available on the Northgate Link Ext OCIP Website
• Other sources: – OCIP Administration Representative – Sound Transit Risk Management Division
Note: In the event of conflicts of OCIP coverage and terms between the Contract Documents (the Contract and the OCIP Insurance Manual) and the actual OCIP policies, the OCIP policies will prevail. (Contract Art. 8.01.J.2)
13
Northgate Link Extension Light Rail Project
OCIP Administration Representative (OAR) • Conduit for Information Flow Between Resident Engineer, ST Risk Management, ST Construction Safety, and Contractor(s) • Facilitates Administration of Sound Transit’s OCIP on the Northgate Link
Extension Project
– OCIP Enrollment – Collection and distribution of Incident Reports – Assists in routing of Claim Reports
14
Northgate Link Extension Light Rail Project
INCIDENTS
vs.
CLAIMS
15
Northgate Link Extension Light Rail Project
Incident Reporting
Contractors and Subcontractors must:
• Complete Incident Report Form before end of shift NOTE: This form is NOT used to establish an insurance claim.
• Provide complete documentation of incident
• Complete description (What happened?) • Photographs (Preserve evidence) • Witness statements, if any
• Deliver completed Incident Report Form and documentation to OCIP Administration Representative for distribution.
16
Northgate Link Extension Light Rail Project
Sound Transit Construction Safety
OCIP Administration Representative
Sound Transit Risk Management Division
Sound Transit Resident Engineer
Insurers [CGL] [BR] [CPL]
Incident Report Completed by Contractor or Subcontractor
Incident Report Completed by Sound Transit
Employees
Incident Report Completed by
Security
Incident Reporting Process Flow Incidents Reported by Contractors, Sound Transit Employees, or Security
17
Northgate Link Extension Light Rail Project
Incident Reporting - Incident Definitions
• Safety Incident – Any accident resulting in bodily injury or property damage to any individual (Contractor or Third-Party) or to the project itself; or, any near miss that had the potential of concluding similarly. • OCIP Incident – Any accident resulting in bodily injury or property damage to any individual (Contractor or Third-Party) or to the project itself that may give rise to an insurance claim.
18
Northgate Link Extension Light Rail Project
Incident Reporting When incident occurs, Contractor/Subcontractor must:
• Alert Resident Engineer and OCIP Administration Representative (OAR) immediately and simultaneously
– OAR will then notify: Construction Safety Manager ST Risk Management Division
• At Resident Engineer’s direction, take reasonable steps to: – Preserve evidence in accordance with proper protocols – Mitigate the loss – Protect undamaged property – Assist as required in investigation process
19
Northgate Link Extension Light Rail Project
Majority of Claims:
• 3rd Party CGL Claims
• Builders Risk Claims
OCIP Insurance Claims
Commercial General Liability
Contractors Pollution Liability
Builders Risk
3rd Party 1st Party 3rd Party
20
Northgate Link Extension Light Rail Project
Claims Reporting Procedure • Claims Against Sound Transit (or claims that name both Sound Transit and Contractor)
– 3rd Party must present a Sound Transit or Washington State Claim Form to Sound Transit Board Administrator
21
Northgate Link Extension Light Rail Project
Claim Form Completed
Delivered/Mailed to Sound Transit
Board Administrator
Sound Transit Resident Engineer
Insurer [CGL]
Sound Transit Construction Safety
OCIP Administration Representative
Sound Transit Risk Management Division
Claims Against Sound Transit Reporting Process Flow
3rd Party Claims Against ST Formal Claims Presented to Sound Transit
by Members of the General Public
Contractor
22
Northgate Link Extension Light Rail Project
• Claims Against Contractor
– 3rd Party presents claim to Contractor (only)
– Examples:
Attorney Demand Letter Other Written Notice Summons and Complaint
– 3rd Party need not present Sound Transit or Washington State Claim Form
23
Northgate Link Extension Light Rail Project
Attorney Demand Letter, Other Written Demand, or Summons and Complaint
Delivered/Mailed to Contractor
Sound Transit Resident Engineer
Insurer [CGL]
Sound Transit Construction Safety
OCIP Administration Representative
Sound Transit Risk Management Division
Claims Against Contractor Reporting Process Flow
3rd Party Claims Against Contractor Claims Presented to Contractors by Members of the General Public
24
Northgate Link Extension Light Rail Project
SOUND TRANSIT NORTHGATE LINK
EXTENSION OCIP MANUAL
NORTHGATE LINK EXTENSION OCIP POLICIES
Contract for Construction
SOUND TRANSIT CONTRACT
Contract Document
Contracts for Insurance
25
Northgate Link Extension Light Rail Project
Liability Claims – Contractor’s Obligations/Responsibilities
• Contractor must cooperate in investigation and claim process with:
– ST Risk Management – OCIP CGL Insurer, Westchester – OCIP CGL Insurer’s Third-Party Administrator (TPA), ESIS
• The Contractor must refrain from:
– Admitting Liability – Making voluntary payments or incurring expenses – Making repairs without direction from Resident Engineer – Assuming any obligations – Making any promises to damaged parties (Such Actions are at Contractor’s Sole Expense)
(COMMERCIAL GENERAL LIABILITY COVERAGE FORM, CG 00 01 10 01, SECTION IV – COMMERCIAL GENERAL LIABILITY CONDITIONS, 2. Duties In The Event Of Occurrence, Offense, Claim or Suit, d., pg. 11 of 16)
26
Northgate Link Extension Light Rail Project
OCIP Primary General Liability Policy – Westchester
Insuring Agreement
• The insurance company will pay those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies. (Subject to all terms, definitions, conditions, exclusions, and limitations in the policy.)
• The insurance company may, at its discretion, investigate any occurrence and settle any claim or suit that may result.
(COMMERCIAL GENERAL LIABILITY COVERAGE FORM, CG 00 01 10 01, SECTION I - COVERAGES, COVERAGE A BODILY INJURY AND PRPERTY DAMAGE LIABILITY, 1. Insuring Agreement, a., pg. 1 of 16)
27
Northgate Link Extension Light Rail Project
OCIP Primary General Liability Policy – Westchester
Duties in Event of Occurrence, Offense, Claim or Suit • Named Insured must:
– Immediately record specifics and date received – Notify insurance company as soon as practicable – Immediately send insurance company any demands, notices, summonses or legal papers received – Authorize insurance company to obtain records and other information – Cooperate with insurance company in investigation, settlement, or defense – Assist insurance company in enforcement of any right of subrogation (COMMERCIAL GENERAL LIABILITY COVERAGE FORM, CG 00 01 10 01, SECTION IV – COMMERCIAL GENERAL LIABILITY CONDITIONS, 2. Duties In The Event of Occurrence, Offense, Claim or Suit, pgs. 10 and 11 of 16)
28
Northgate Link Extension Light Rail Project
Liability Claims – Claim Management • ST Risk Management Division coordinates claim process
– Quality control of claims handling process – Monitors claims adjusting and investigation
Note: Westchester (CGL Insurer) and ESIS (Adjuster) – Communicates with Westchester and ESIS – Reports to RE on status of claims – Meets periodically with RE and Contractor on status of claims
• Westchester/ESIS will determine liability and all settlement amounts (As noted in the CGL Policy Insuring Agreement)
29
Northgate Link Extension Light Rail Project
Builders Risk Coverage - What is covered
• Builders Risk is a special type of property insurance that protects the Owner and Contractor/Subcontractors with 1st Party Coverage:
– Against all risks of direct physical loss of or damage to insured property during course of construction:
While at Insured Project location While in offsite temporary storage While in inland transit
– Includes Permanent Works and Temporary Works
(Subject to all policy terms, conditions, exclusions, and limitations)
(ACE BUILDERS RISK POLICY, PART A – COVERAGE, 1. INSURING AGREEMENT and 2. PROPERTY INSURED)
30
Northgate Link Extension Light Rail Project
Builders Risk Coverage - What is not covered
• Does not cover:
– Loss, theft, or damage to Contractor’s/Subcontractor’s tools, machinery, plant and equipment, spare parts, and accessories:
Whether owned, loaned, hired, or leased, and Not destined to become a permanent part of the completed Insured Project.
(Contractors/Subcontractors are advised to arrange for their own Contractor’s equipment insurance for any owned, leased, or borrowed equipment.)
(ACE BUILDERS RISK POLICY, PART B – EXCLUSIONS AND LIMITATIONS, 2. PROPERTY EXCLUDED, B.)
31
Northgate Link Extension Light Rail Project
Contractor Receives Claim
or Completes ST Claim Form
OCIP Administration Representative
Sound Transit Resident Engineer
Insurer [BR]
Sound Transit Construction Safety
Sound Transit Risk Management Division
Builders Risk Claim Reporting Process Flow 1st Party Builders Risk Claims
Builders Risk Claims Asserted Against Contractors or Reported by Contractors
32
Northgate Link Extension Light Rail Project
Contractors Pollution Liability Coverage
• Covers loss incurred as a result of a pollution condition
– “Pollution condition”
Discharge, dispersal, release, escape, migration, or seepage Of any solid, liquid, gaseous, or thermal irritant, contaminant or pollutant On, in, into, or upon land and structures thereon, the atmosphere, surface water, or groundwater.
(Subject to all policy terms, definitions, conditions, exclusions, limitations, and the self-insured retention.)
(ACE CONTRACTORS POLLUTION LIABILITY II INSURANCE POLICY, I. INSURING AGREEMENT, pg. 1 of 8, and V. DEFINITIONS, R., pg. 3 of 8)
33
Northgate Link Extension Light Rail Project
Contractor Provides an Immediate Verbal Report
Followed by a Completed Incident Report Form
OCIP Administration Representative
Sound Transit Resident Engineer
Insurer [CPL]
Sound Transit Construction Safety
Sound Transit Risk Management Division
Contractors Pollution Liability Claim Reporting Process Flow 3rd Party Contractors Pollution Liability Claims
Contractor Pollution Liability Claims Reported by Contractors
34
Contractor Responsibility for Deductibles/Self-Insured Retentions • Commercial General Liability - $100,000 per Occurrence
• Builders Risk - First $250,000 per Occurrence
• Contractors Pollution Liability - $250,000 per Occurrence
Northgate Link Extension Light Rail Project
35
Northgate Link Extension Light Rail Project
Deductible Charge-Back System • Insurer(s) will invoice Sound Transit for all deductible costs
– Includes Claim Adjustment Fees and Allocated Expenses
• Sound Transit will pay insurer’s invoice for deductible costs
• Deductible costs will be allocated to Contractor(s) upon the adjuster’s investigation/apportionment of responsibility
• Sound Transit will send monthly claims invoices to Contractor(s)
• Contractor(s) shall reimburse Sound Transit within 30 days
• Unpaid invoices will be reconciled/deducted from contractor’s payments
36
Q & A Open Discussion
Northgate Link Extension Light Rail Project