Transcript U-Link OCIP PowerPoint

University Link Light Rail Project
Owner Controlled Insurance Program (OCIP)
Presented by
Sound Transit Risk Management Division
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University Link Light Rail Project
What is an Owner Controlled Insurance Program (OCIP)?
An OCIP is a controlled insurance program that insures:
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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).
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Higher Limits
Better Coverage
Terms &
Conditions
Dedicated
Products & Completed
Operations Coverage
OCIP
BENEFITS
Improved
Cash Flow
Reduced
Loss Litigation
Increased
M/W/DBE
Participation
Greater
Claims Management
Control
Improved
Safety
Performance
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Advantages
• The U-Link 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
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Disadvantages
OCIP management reporting may result in additional administrative
burden
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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.)
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Central Link OCIP Lessons Learned
U-Link 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
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Who is Covered?
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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.
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University Link Light Rail Project
Who is NOT Covered?
• Parties not involved in day-to-day construction activities
– Examples include:
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Contract Haulers or Truckers
Vendors, Suppliers
Architects & Engineers
Other Professional Services firms
Hazardous materials remediation contractors
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University Link Light Rail Project
Sound Transit Furnished OCIP Insurance
• Primary Commercial General Liability (CGL)
– Westchester - $1M/Occ - $2M Agg
– Includes Stop-Gap Employers Liability
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Excess Liability
– 3 Excess Layers = $100M Limit Tower of Coverage
• Builders Risk
– Lexington - $100M/Occ - $100M Agg
• Excess Builders Risk
– 2 Excess Layers = $300M Limit Tower of Coverage ($300M x $100 = $400M)
• Contractors Pollution Liability
– ACE - $50M/Occ - $50M Agg
Refer to OCIP Insurance Manual for more detailed description of OCIP coverages.
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University Link Light Rail Project
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
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University Link 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.
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University Link 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 U-Link 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)
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University Link 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 U-Link Project
– OCIP Enrollment
– Collection and distribution of Incident Reports
– Assists in routing of Claim Reports
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University Link Light Rail Project
INCIDENTS
vs.
CLAIMS
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University Link 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.
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University Link Light Rail Project
Incident Reporting Process Flow
Incidents Reported by Contractors, Sound Transit Employees, or Security
Incident Report
Completed by
Contractor or
Subcontractor
Incident Report
Completed by
Sound Transit
Employees
Sound Transit
Resident
Engineer
OCIP
Administration
Representative
Sound Transit Risk
Management Division
Incident Report
Completed by
Security
Sound Transit
Construction Safety
Insurers
[CGL] [BR] [CPL]
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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.
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University Link 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
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University Link Light Rail Project
OCIP Insurance Claims
Majority of Claims:
• 3rd Party CGL Claims
• Builders Risk Claims
Commercial
General Liability
Builders Risk
Contractors
Pollution Liability
3rd Party
1st Party
3rd Party
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University Link 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
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University Link Light Rail Project
Claims Against Sound Transit Reporting Process Flow
Claim Form
Completed
Delivered/Mailed to
Sound Transit
Board Administrator
3rd Party Claims Against ST
Formal Claims Presented to Sound Transit
by Members of the General Public
Sound Transit
Risk Management Division
Claims Group
Insurer
[CGL]
Contractor
OCIP
Admin.
Representative
Sound Transit
Resident
Engineer
Sound Transit
Construction
Safety
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University Link 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
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University Link Light Rail Project
Claims Against Contractor Reporting Process Flow
Attorney Demand Letter, Other Written
Demand, Summons and Complaint
Delivered/Mailed to
Contractor
Sound Transit
Resident
Engineer
Sound Transit
Risk Management Division
Claims Group
3rd Party Claims Against Contractor
Claims Presented to Contractors
by Members of the General Public
OCIP
Admin.
Representative
Sound Transit
Construction
Safety
Insurer
[CGL]
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SOUND TRANSIT
CONTRACT
SOUND TRANSIT
U-LINK
OCIP MANUAL
U-LINK
OCIP POLICIES
Contract for
Construction
Contract Document
Contracts for
Insurance
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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:
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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)
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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)
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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)
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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)
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University Link 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
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Includes Permanent Works and Temporary Works
(Subject to all policy terms, conditions, exclusions, and limitations)
(LEXINGTON COMPLETED VALUE BUILDERS RISK POLICY, LEXBLDRSRSK.DOC,
PART A – COVERAGE, 1. INSURING AGREEMENT and 2. PROPERTY INSURED, pgs. 4 and 5 of 22)
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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.)
(LEXINGTON COMPLETED VALUE BUILDERS RISK POLICY, LEXBLDRSRSK.DOC,
PART B – EXCLUSIONS AND LIMITATIONS, 2. PROPERTY EXCLUDED, B., pg. 12 of 22)
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Builders Risk Claim Reporting Process Flow
Contractor
Receives Claim
or
Completes ST Claim Form
Sound Transit
Resident
Engineer
1st Party Builders Risk Claims
Builders Risk Claims Asserted Against
Contractors or Reported by Contractors
OCIP
Administration
Representative
Sound Transit
Risk Management Division
Sound Transit
Construction
Safety
Insurer
[BR]
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University Link 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)
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Contractors Pollution Liability Claim Reporting Process Flow
3rd Party Contractors Pollution Liability Claims
Contractor Pollution Liability Claims
Reported by Contractors
Contractor
Provides an Immediate Verbal Report
Followed by a
Completed Incident Report Form
Sound Transit
Resident
Engineer
Sound Transit
Construction
Safety
Sound Transit
Risk Management Division
Claims Group
OCIP
Administration
Representative
Insurer
[CPL]
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University Link Light Rail Project
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
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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
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Q&A
Open Discussion
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