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Insurance Requirements Colorado gov

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					    Department of Personnel & Administration


                       Insurance Requirements
  General
  Workers 
Compensation      Presentation for State Purchasing
   Liability

    Limits
                  Markie Davis
  Additional 
   Insured        Risk Manager
 Cancellation     (303) 866-4277
 Certificates

Public Entities

Builders Risk
                                                      1
    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
                                                                2
    Department of Personnel & Administration


                    Contract Insurance Guidelines
  General          Consult with legal counsel or risk on modifying or waiving standard 
  Workers         insurance language
Compensation
                      • In rare cases, State may want to assume a risk
   Liability               • low risks + prohibitive costs
    Limits                 • relevant information
  Additional                    • work description & location
   Insured
                                • employee oversight
 Cancellation

 Certificates

Public Entities

Builders Risk
                                                                                 3
    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
                                                                                    4
    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
                                                                                 5
    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.            6
    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  7
                  insured’s premises once those operations have been completed. 
    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. State does not need to be added as
    Limits        additional insured.
  Additional 
                  Definitions:
   Insured

 Cancellation     •Hired Automobile Coverage – Coverage for automobiles
                  whose exclusive use and control has been temporarily
 Certificates
                  given to another for a consideration. The business auto
Public Entities   definition of includes auto borrowed except those borrowed
                  from an employee.
Builders Risk     •Non-Owned  Automobile  Coverage  – Coverage for
                  automobiles owned by employees and used for company 8
                  business.
    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.
                                                                                       9
    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. 10
    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 Insurance policies (leases and 
Compensation      construction contracts will require the additional insured coverage for 
   Liability      completed operations on endorsements CG 2010 11/85, CG 2037, or 
                  equivalent).  Coverage required of the contract will be primary over 
    Limits        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
                                                                                   11
    Department of Personnel & Administration


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

 Cancellation

 Certificates

Public Entities

Builders Risk
                                                                                            12
    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
                                                                                  13
    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
                                                                                            14
    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
                                                                                        15
    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
                                                                                     16
    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
    Bonds                                                           17
                                                  • cancellation Notice
    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

    Bonds
                                                                                      18
    Department of Personnel & Administration


                    Contract Insurance Guidelines
  General
  Workers 
                  Surety Bonds – A guarantee, in which the
Compensation      surety guarantees principal (contractor)
   Liability      in the bond, will perform the “obligation”
    Limits        stated in the bond.
  Additional 
   Insured        •If the contractor fails to perform the
 Cancellation     obligation stated in the bond, both the
                  principal and the surety are liable, and
 Certificates
                  their liability is “joint and several.”
Public Entities

    Bonds
                                                         19
    Department of Personnel & Administration


                      Contract Insurance Guidelines
  General
  Workers 
                  Surety Bond Basics
Compensation
                  Definitions:
   Liability
                  Principal – Contractor
    Limits

  Additional      Obligee – The party owed the obligation, in this case the State
   Insured        of Colorado.
 Cancellation     Penalty or Penal Amount – The upward limit of liability on
                  the bond.
 Certificates

Public Entities

    Bonds
                                                                            20
    Department of Personnel & Administration


                    Contract Insurance Guidelines
  General
  Workers 
                  Surety Bond Basics
Compensation
                  Types of Surety Bonds:
   Liability

    Limits        •Bid Bond – The obligation in the bond is
  Additional      that the principal will honor the bid.
   Insured

 Cancellation     •Performance Bond - The obligation in
                  the bond is that the principal will
 Certificates
                  complete the project.
Public Entities
                  •Payment Bond - The obligation in the
    Bonds
                  bond is that the principal will properly21
                  pay subcontractors and suppliers.
                      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.                                        22
                 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.

                                       23
                     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.
                                                 24
                       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.
                                                     25
                    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.



                                                  26
                       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.)

                                                      27
Questions?



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