1 presented by sound transit risk management division owner controlled insurance program (ocip)...

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Presented byPresented by

Sound Transit Risk Management DivisionSound Transit Risk Management Division

Owner Controlled Insurance Program (OCIP)Owner Controlled Insurance Program (OCIP)

University Link Light Rail ProjectUniversity Link Light Rail Project

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What is an Owner Controlled Insurance Program (OCIP)?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 activitiesassociated with the project (if any).

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ImprovedSafety

Performance

ImprovedSafety

PerformanceGreaterClaims Management

Control

GreaterClaims Management

Control

IncreasedM/W/DBE

Participation

IncreasedM/W/DBE

Participation

ReducedLoss Litigation

ReducedLoss Litigation

ImprovedCash FlowImprovedCash Flow

DedicatedProducts & CompletedOperations Coverage

DedicatedProducts & CompletedOperations Coverage

Better CoverageTerms &

Conditions

Better CoverageTerms &

Conditions

Higher LimitsHigher Limits

OCIPBENEFITS

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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

• 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?

• 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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Who is NOT Covered?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 InsuranceSound Transit Furnished OCIP Insurance • Primary Commercial General Liability (CGL)

– Westchester - $1M/Occ - $2M Agg– Includes Stop-Gap Employers Liability

• 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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Contractor Responsibility for Deductibles/Self-Insured RetentionsContractor 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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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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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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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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INCIDENTS

vs.

CLAIMS

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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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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 FlowIncidents Reported by Contractors, Sound Transit Employees, or Security

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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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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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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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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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Claim Form Completed

Delivered/Mailed to Sound Transit

Board Administrator


Insurer [CGL]

Sound Transit Construction

Safety

OCIP Admin.

Representative


Claims Group

Claims Against Sound Transit Reporting Process Flow

3rd Party Claims Against STFormal Claims Presented to Sound Transit

by Members of the General Public

Contractor

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• 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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Attorney Demand Letter, Other Written Demand, Summons and Complaint

Delivered/Mailed to Contractor


Insurer [CGL]


Safety

OCIP Admin.

Representative


Claims Group

Claims Against Contractor Reporting Process Flow

3rd Party Claims Against ContractorClaims Presented to Contractors by Members of the General Public

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SOUND TRANSIT U-LINK

OCIP MANUAL

U-LINK OCIP POLICIES

Contract forConstruction

SOUND TRANSIT CONTRACT

Contract Document Contracts forInsurance

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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:

– 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 investigationNote: 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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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)

(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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Contractor Receives Claim

or Completes ST Claim Form



Insurer [BR]


Safety


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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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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Contractor Provides an Immediate Verbal Report

Followed by aCompleted Incident Report Form



Insurer [CPL]


Safety


Claims Group

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 RetentionsContractor 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 & AQ & A

Open Discussion


1 presented by sound transit risk management division owner controlled insurance program (ocip)...

Documents

insurance coverage

projectspecific ocip

traditional insurance

ulink ocip improvements

certificate of insurance

dedicated limits of

project site

agg excess builders