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Contract Insurance Guidelines Colorado gov

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					    Department of Personnel & Administration


                    Contract Insurance Guidelines
  General
  Workers         • The purpose of Insurance in contracts
Compensation
                      • guarantee service performance
   Liability
                      • protection against third party claims
    Limits
                      • responsible vendors
  Additional
   Insured

 Cancellation

 Certificates

Public Entities

Builders Risk
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    Department of Personnel & Administration


                    Contract Insurance Guidelines
  General          Consult with legal counsel or risk on modifying or waiving standard
  Workers         insurance language
Compensation
                      • State may want to assume a risk
   Liability               • Low risks + prohibitive costs
    Limits                 • Relevant information
  Additional                    • work description & location
   Insured
                                • employee oversight
 Cancellation
                                •See the State of Colorado Insurance Requirements
 Certificates                   Check List

Public Entities

Builders Risk
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    Department of Personnel & Administration


                     Contract Insurance Guidelines
  General
                  1) Workers’ Compensation Insurance as required by state statute,
  Workers
Compensation
                  and Employer’s Liability Insurance covering all of contractor’s
                  employees acting within the course and scope of their employment.
   Liability

    Limits
                      PLEASE NOTE: If the contractor does not have any employees,
  Additional          workers’ compensation coverage is not required. If this is the
   Insured            case, have the contractor write a letter stating that they do not
                      have employees and therefore are not required to carry workers’
 Cancellation         compensation coverage.
 Certificates

Public Entities

Builders Risk
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    Department of Personnel & Administration


                       Contract Insurance Guidelines
  General
                  2) Commercial General Liability Insurance written on ISO occurrence
  Workers
Compensation
                  form CG 00 01 10/93 or equivalent, covering premises operations, fire
                  damage, independent contractors, products and completed
   Liability      operations, blanket contractual liability, personal injury, and
                  advertising liability with minimum limits as follows:
    Limits
                  a.   $1,000,000 each occurrence;
  Additional
   Insured        b.   $1,000,000 general aggregate;
 Cancellation     c.   $1,000,000 products and completed operations aggregate; and
                  d.   $50,000 any one fire.
 Certificates

Public Entities

Builders Risk
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    Department of Personnel & Administration


                     Contract Insurance Guidelines
  General
                  General Liability coverage is required if any of the following applies:
  Workers
Compensation      •Operations of the contractor could cause bodily injury or damage to
                  state or private property.
   Liability
                  •Contract has a hold harmless/indemnification provision.
    Limits
                  •Contractor will (a) have access to confidential information about
  Additional      other persons or (b) provide security guard service, or (c) create
   Insured
                  publications of any form.
 Cancellation     •Contractor will lease a portion of a State building.
 Certificates     •Contractor will have subcontractors.

Public Entities
                  •Contractor will provide a tangible, physical product that could cause
                  bodily injury or property damage.
Builders Risk     •Contractor’s service, after completion, could fail from faulty
                  workmanship and cause bodily injury or property damage.           8
    Department of Personnel & Administration


                       Contract Insurance Guidelines
  General         Definitions:

  Workers         •Advertising Injury – Coverage that insures for the offenses of libel,
Compensation      slander, invasion of privacy, copyright infringement and
                  misappropriation of advertising ideas.
   Liability
                  •Bodily Injury Liability – Liability imposed on insured for damages due
    Limits        to bodily injury, sickness, or disease.
  Additional      •Contractual Liability – The assumption of the other contracting party’s
   Insured        liability under specified conditions.
 Cancellation     •Independent Contractor Liability – Liability associated with
                  supervising independent contractors.
 Certificates
                  •Personal Injury-A category of insurable offenses that produce harm
Public Entities   other than bodily injury. These offenses include: false arrest,
                  detention, slander, libel, and invasion of privacy.
Builders Risk
                  •Products-Completed Operations Liability – Liability arising out of the
                  insured’s products or business operations conducted away from the  9
                  insured’s premises once those operations have been completed.
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    Department of Personnel & Administration


                   Contract Insurance Guidelines
  General
                  3) Automobile Liability Insurance covering any auto
  Workers
                  (including owned, hired, and non-owned autos) with a
Compensation
                  minimum limit as follows:    $1,000,000 each accident
   Liability      combined single limit.
    Limits
                  Definitions:
  Additional
   Insured
                  •Hired Automobile Coverage – Coverage for automobiles
 Cancellation     whose exclusive use and control has been temporarily
                  given to another for a consideration. The business auto
 Certificates
                  definition of includes auto borrowed except those borrowed
Public Entities   from an employee.
                  •Non-Owned Automobile Coverage – Coverage for
Builders Risk     automobiles owned by employees and used for company
                  business.                                                12
    Department of Personnel & Administration


                      Contract Insurance Guidelines
  General
                  4) Professional liability insurance with minimum limits of liability of
  Workers         not less than $________________.
Compensation
                  Required when Contractor is providing professional or technical
   Liability      services (medical, legal, engineering, architectural, real estate
    Limits
                  appraisal, computer programming, etc.)
                  • Professional Liability and E&O
  Additional
   Insured        • A "claims-made" policy
 Cancellation         • claim first reported during the policy term, and vendors should
                      agree to purchase a two-year extended reporting period following
 Certificates         the contract completion date.

Public Entities       • Malpractice” is the handling of a case in a manner not agreeing
                      with accepted methods, or professional conduct lacking in
Builders Risk         reasonable skill or judiciousness.
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    Department of Personnel & Administration


                    Contract Insurance Guidelines
  General         Crime Insurance - Coverage for employee theft of money,
  Workers         securities, or property.
Compensation

   Liability
                  •Crime insurance is required if the contractor is accepting or
    Limits        handling state monies or securities.
  Additional
   Insured
                  Builders Risk Insurance - A property insurance policy that is
 Cancellation     designed to cover property in the course of construction. A Builders
                  Risk Policy typically applies not only to the property at the
 Certificates     construction site, but also to property at off-site storage locations
                  and in transit.
Public Entities
                  •Builder risk insurance is required if the contractor will construct or
Builders Risk     substantially renovate a state building or structure.           NOTE:
                  Coverage limit should be the completed value of the project. 14
    Department of Personnel & Administration


                      Contract Insurance Guidelines
  General
                  B. The State of Colorado shall be named as additional insured on the
  Workers         Commercial General Liability and Automobile Liability Insurance
Compensation      policies (leases and construction contracts will require the additional
   Liability      insured coverage for completed operations on endorsements CG 2010
                  11/85, CG 2037, or equivalent). Coverage required of the contract will
    Limits        be primary over any insurance or self-insurance program carried by
                  the State of Colorado.
  Additional
   Insured        • An “additional insured” endorsement (not applicable to professional
                  exposures or workers’ compensation) protects against claims
 Cancellation
                  presented against the State, which arise out of the vendor's
 Certificates     operations.
                  • "Additional named insured" status is not available in the insurance
Public Entities   market.
Builders Risk
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    Department of Personnel & Administration


                       Contract Insurance Guidelines
  General
                  • An “additional insured” endorsement acts to support required indemnification:
  Workers
                  Chapter 6, Appendix A, page 6-97, Special Provisions
Compensation
                  To the extent authorized by law, the Contractor shall indemnify, save, and hold
                  harmless the State, its employees and agents, against any and all claims,
   Liability
                  damages, liability and court awards including costs, expenses, and attorney fees
    Limits        incurred as a result of any act or omission by the Contractor, or its employees,
                  agents, subcontractors, or assignees pursuant to the terms of this contract.
  Additional
   Insured

 Cancellation

 Certificates

Public Entities

Builders Risk
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    Department of Personnel & Administration


                      Contract Insurance Guidelines
  General
                  C. The insurance shall include provisions preventing cancellation or
  Workers
Compensation
                  non-renewal without 45 days prior notice to the State by certified
                  mail.
   Liability      • CRS 10-4-109.7 specifies 45 days.
    Limits

  Additional
   Insured

 Cancellation

 Certificates

Public Entities

Builders Risk
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    Department of Personnel & Administration


                       Contract Insurance Guidelines
  General
                  D.   The Contractor will require all insurance policies in any way related to the
  Workers              contract and secured and maintained by the contractor to include clauses
Compensation           stating that each carrier will waive all rights of recovery, under
                       subrogation or otherwise, against the State of Colorado, its agencies,
   Liability
                       institutions, organizations, officers, agents, employees and volunteers.
    Limits

  Additional           Waiver of Subrogation – The relinquishment by an insurer of the right to
   Insured             collect from another party for damages paid on the behalf of the insured.

 Cancellation

 Certificates

Public Entities

Builders Risk
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    Department of Personnel & Administration


                     Contract Insurance Guidelines
  General
                      E. All policies evidencing the insurance coverages required hereunder
  Workers             shall be issued by insurance companies satisfactory to the State.
Compensation

   Liability
                  A.M. Best Company
    Limits

  Additional
   Insured
                  WWW.AMBEST.COM

 Cancellation
                      It is free to register on the A.M Best Website and look up
                      and insurance company’s rating. In general, a rating of
 Certificates         B+ or better is acceptable.

Public Entities

Builders Risk
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    Department of Personnel & Administration


                  Contract Insurance Guidelines
  General
                  F. The Contractor shall provide certificates showing insurance coverage
  Workers         required by this contract to the State within 7 business days of the
Compensation      effective date of the contract, but in no event later than the
                  commencement of the services or delivery of the goods under the
   Liability
                  contract. No later than 15 days prior to the expiration date of any such
    Limits        coverage, the contractor shall deliver the State certificates of insurance
                  evidencing renewals thereof. At any time during the term of this contract,
  Additional      the State may request in writing, and the contractor shall thereupon within
   Insured        10 days supply to the State, evidence satisfactory to the State of
                  compliance with the provisions of this section.
 Cancellation

 Certificates

Public Entities

Builders Risk
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    Department of Personnel & Administration


                  Contract Insurance Guidelines
  General                                         The ACORD form should
                                                  be reviewed to confirm:
  Workers                                         • the type and amount of
Compensation                                      insurance
                                                  • the expiration date of the
   Liability                                      policy
    Limits                                        • coverage deletion by
                                                  endorsement
  Additional                                      • excess and Umbrella
   Insured                                        coverage.
                                                  • additional insured status
 Cancellation                                     by endorsement; beware
                                                  “certificate holder”
 Certificates                                     • waiver of Subrogation
                                                  status by endorsement
Public Entities                                         • added to Workers’
                                                        Compensation and
Builders Risk                                           Commercial General
                                                        Liability
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                                                  • cancellation Notice
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    Department of Personnel & Administration


                      Contract Insurance Guidelines
  General
                  If the contractor is a "public entity" within the meaning of the
  Workers         Colorado Governmental Immunity Act, CRS 24-10-101, et seq., as
Compensation      amended ("Act"), the contractor shall at all times during the term of
   Liability      this contract maintain such liability insurance, by commercial policy
                  or self-insurance, as is necessary to meet its liabilities under the Act.
    Limits        Upon request by the State, the contractor shall show proof of such
                  insurance.
  Additional
   Insured        • Other public entities should be reminded of like interest reciprocity.
 Cancellation

 Certificates

Public Entities

Builders Risk
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                      FAQ
• The contractor’s agent says that they cannot
  get the endorsements as required by the
  insurance requirements in the state contract;
  what do we do?
• In many instances, the contractor’s agent or
  broker has not even approached the
  insurance company with your request. If this
  happens, please call the Risk Manager and
  she can check with the State’s insurance
  broker for confirmation of the unavailability of
  endorsements from the contractor's insurance
  company.                                        24
                 FAQ
• Should the State be added as additional
  insureds on Workers’ Compensation
  and Professional Liability Policies?

• No, in fact, no one can be named as an
  additional insured on these polices.


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                     FAQ
• If the contractor is a large one, do I still need
  to insist on the insurance requirements and
  being named as an additional insured?
• Yes, you would have no way of knowing if the
  company’s assets were available for losses
  that might occur, whereas you can be
  confident in an insurance carrier with a quality
  AM Best rating.

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                       FAQ
• Why do we need an indemnity clause when we
  are added as an additional insured on the
  liability policy?
• Always remember that insurance is only one way
  that the contractor can protect the state, and if you
  have an indemnity provision in the contract, that
  contractor is obligated to indemnify the state
  whether their insurance covers the loss or not.
  This puts the onus on the contractor rather than the
  state to make certain that their coverage is
  sufficient and current.
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                    FAQ
• What does a Commercial Umbrella
  Policy cover?
• A commercial umbrella policy raises the
  limits of all of the underlying liability
  policies to the limit of the umbrella policy.



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                       FAQ
• When does a contractor need to have
  professional liability insurance?

• Whenever the contractor is expected to provide
  the state with professional services. If a contractor
  is providing only physical work, then professional
  liability isn't needed (only general liability and
  automobile liability.)

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            Questions?
Call the Risk Management Office
Joel Hirschboeck, 303-866-4277
               or
  joel.hirschboeck@state.co.us

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