Northgate Link Extension Light Rail Project Owner Controlled - - PowerPoint PPT Presentation

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Sound Transit Risk Management Division Owner Controlled Insurance Program (OCIP)

Northgate Link Extension Light Rail Project

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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).

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Improved Safe fety Perf rforman ance Great ater Cl Claims ms M Management Control Increased M/W/DB DBE Partic icipa ipatio ion Redu duced Loss L Lit itigation Improved Ca Cash F Flow

Dedic icate ted Products ts & & Comple lete ted Operati tions ns C Coverage

Better C r Covera rage Terms & s & Condit itio ions Higher L Lim imit its

OCIP BENEFITS

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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

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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.)

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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

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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

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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

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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

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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

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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.

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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)

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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

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Northgate Link Extension Light Rail Project

INCIDENTS vs. CLAIMS

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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.

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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

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Northgate Link Extension Light Rail Project

Incident Reporting - Incident Definitions

• Safety Incident – Any accident resulting in bodily injury
• r property damage to any individual (Contractor or Third-Party)
• r to the project itself; or, any near miss that had the potential of

concluding similarly.

• OCIP Incident – Any accident resulting in bodily injury
• r property damage to any individual (Contractor or Third-Party)
• r to the project itself that may give rise to an insurance claim.

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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

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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

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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

• r Washington State Claim Form to

Sound Transit Board Administrator

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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

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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

• r Washington State Claim Form

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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

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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

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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)

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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

• r 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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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)

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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)

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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)

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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,

• r borrowed equipment.)

(ACE BUILDERS RISK POLICY, PART B – EXCLUSIONS AND LIMITATIONS, 2. PROPERTY EXCLUDED, B.)

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Northgate Link Extension Light Rail Project

Contractor Receives Claim

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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

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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
• r 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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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

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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

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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

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Q & A Open Discussion

Northgate Link Extension Light Rail Project