Contract Insurance Requirements Contract Insurance Requirements ► The contract will specify insurance requirements to protect owner. ► Contractor is responsible for obtaining insurance for protection from liability caused by construction operations. It is not economical to buy all insurance coverages available for a particular project. Contractor must evaluate the probability of liability occurrences and compare to cost of premium. Property Insurance on Project During Construction ► All Risk Builder’s Risk Insurance - Covers loss or damage to the project and materials caused by external effects. ► Named-peril Builder’s Risk Insurance – Covers loss or damage to project/materials due to fire or lightening. Several endorsements can be added on: Windstorm, hail, explosion, riot, civil commotion, Aircraft, vehicles and smoke Vandalism and malicious mischief Water damage Property Insurance on Project During Construction: Specific Loss ► Earthquake Insurance ► Bridge Insurance : For bridge projects. Loss due to fire, lightning, flood, ice, collision, explosion, riot, vandalism, wind, tornado and earthquake. ► Installation Floater: Covers expensive mechanical equipment from the time it leaves the place of shipment until it is installed on the project. This will take care of damage or loss to equipment either during transport and/or storage. Property Insurance on Contractor’s Own Property It is wise for the contractor to insure his/her own property utilized on a project: ► Property Insurance on Contractor Buildings: Buildings, sheds, warehouses, trailers and personal property contained therein. ► Contractor’s Equipment Insurance: Backhoes, loaders, etc. ► Motor Truck Cargo Policy: Covers loss of materials or supplies while being transported in contractor’s vehicles. Property Insurance on Contractor’s Own Property ► Fidelity Bond: Protects contractor against loss due to employee dishonesty. ► Crime Insurance: Protects contractor against loss of money, securities, equipment and valuables through burglary, theft, robbery, destruction or disappearance. ► Valuable Papers Destruction Insurance: Covers loss of books, records, deeds, maps, mortgages, contracts etc., except by misplacement, unexplained disappearance, wear and tear, deterioration, vermin or war. Liability Insurances Of particular importance is obtaining insurance in case of injury or loss for which Contractor may be held liable. ► Contractor’s Public Liability and Property Damage Insurance: Protects contractor in case of injuries to persons other than employees, and also property of others. ► Completed Operations Liability: This insurance protects contractor from claims that arise from faulty performance on projects already completed and handed over to the owner Liability Insurances ► Professional Liability Insurance: • Provides coverage to the contractor against claims that arise out of design and other professional services rendered by the contractor or owner. ► Worker’s Compensation Insurance: • provides wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer. ► Employer’s Liability Insurance: • Covers bodily injury or death of an employee in the course of employment ► Owner’s Protective Liability Insurance: • Protects owner from liability for damages arising from the operations of the prime contractor or subcontractors. Term: Subrogation ► Subrogation allows an insurance company to sue a responsible party for damages. ► If owner provides Builder’s Risk Insurance, insurance company can seek satisfaction from contractor or subs. ► To avoid this, name owner, contractor and subs as insureds on the same policy. ► Another means of avoiding litigation among the parties due to loss is by all parties waiving all rights against each other.
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