This document summarizes insurance requirements for contractors working with California Polytechnic State University. It outlines the need to transfer risk from the university to contractors through insurance and indemnification in contracts. Basic insurance types like general liability, auto liability, and workers' compensation are required, along with proof of insurance through certificates of insurance naming the university as an additional insured. Specialized policies and endorsements may also be needed depending on the type of work. The document provides examples of insurance issues that can arise and tips for managing risk through contractual agreements and verification of appropriate coverage.

1. Contract Insurance Requirements Joseph C. Risser, CPCU, ARM-P Director, Risk Management California Polytechnic State University

2. Objectives Need for Insurance in Contracts Transferring Risk Basic & Special Insurance Proof of Insurance 1 & 2 Special Problems

3. Caveats NOT a lawyer NOT your legal counsel NOT your risk manager Specific details of a situation (contract) must be identified and addressed to manage the risks involved. General reasons, requirements and performance

4. Agenda Set the Stage Review Present details Tips Questions

5. Simple Roof Repair

6. Bob, the Roofer Leaking roof in golf clubhouse Just a quick repair, no contract necessary Drying the roof to apply sealer FIRE Structure & Contents loss – TOTAL Loss of real and personal property Business interruption – Owner & Tennant Loss of rent and revenue

9. Russ, Furniture Systems Vendor Contracted for modular furniture and installation 5 years later – Covered shelf unit above desk falls on employee and equipment Employee Injuries Equipment Damage Facility Damage Loss of Work

12. Tom, the Landscaper Transplant “signature” Palm Tree Large Crane, Large Back Shovel Tree defect not considered - technique Top crashes onto to backhoe, pins driver and control, boom swings and slices wires Contractor’s employee injured Equipment damaged Wires – data and voice (RR & 911)

13. What Can Go Wrong? Damage to/ Loss of University Buildings Loss of University and Personal property Loss of Rent & Loss of Revenue Injury to University Employees Interruption of Activities & Services Damage to Contractor Equipment Injury to Contractor Employee Damage to Property of Others

14. Who Pays? Replace the building Replace the equipment Replace the personal property Medical expenses, rehabilitation Repair the equipment Repair the damage Compensate for lost service & revenue And what about the Palm Tree?

15. When You Hire a Contractor Contractor Service provider Vendor When you buy materials AND When you rent your facilities to others

16. Transfer the Risks Transfer the Risk of doing the “WORK” Hire an “expert” & their resources Direction and control of the activities and results Contractual responsibilities - operations & products Transfer the Risk (responsibility) of having to pay for losses that arise from the “WORK” Injury to persons, damage to property Interruption of your business activities Failure to follow contract requirements

17. Contractual Transfer of Risk Indemnification – the promise to pay for any losses of the University resulting from the “WORK” Types Restrictions 2 . Insurance – the financial resource to pay for losses due to the “WORK” Types Specifications

18. Contract Indemnification ___(entity)__ shall defend, indemnify, hold harmless and protect the State of California, the Trustees of the California State University, ___CAMPUS___, their officers, employees, representatives, agents, students and volunteers (the “University”) from and against any and all liability, loss, damage, expense, cost (including without limitation to costs and fees of litigation) of every nature arising out of or in connection with ___(entity’s)__ (any subcontractor, anyone directly or indirectly employed by anyone for whose acts any of them may be liable) ___(performance of work, use, etc.)___ hereunder or failure to comply with any of its obligations contained in the agreement, except such loss or damage which was caused by the sole negligence or willful misconduct of the University.

19. Contract Insurance Specify products & materials? Specify design & construction? Specify access & safety? Specify insurance!

20. SPECIFICATIONS for INSURANCE Funding contractual indemnification Limitations Description of Losses: Arising out of the “WORK” [Operations, Products and Completed Operations] Arising out of the ownership and use of vehicles Arising out of employment of workers Arising out of damage to property Arising out of professional services Proof of Insurance - Documentation

21. Basic Insurance for Contracts ExO 849 WC - Statutory Limits EL - $1 Million per illness and injury Work related injury or illness for their employees Workers’ Comp & Employer’s Liability WC & EL $1 Million combined single limit per accident Injury & damage from their ownership & operation of autos Automobile Liability (Commercial or Business Auto) CA or BA or AL $1 Million / occurrence $2 Million aggregate Injury, damage and contractual liability from their “work” General Liability (Commercial or Comprehensive) CGL Limits (minimum) Coverage Type

22. Specialized Insurance ExO 849 Amount as needed to meet minimum required limits Increase limits for specific insurance policies (general, auto) Excess or Umbrella Liability 100% of the value of the property Damage to your property being constructed, remodeled and/or installed Builder’s Risk (course of construction or installation) $1 Million / claim $1 Million aggregate Errors and Omissions in Professional Services causing injury, damage, failure to perform Professional Liability (errors & omissions) Limits (minimum) Coverage Type

23. Hazardous Materials ExO 849 $ 1 M Occurrence Cleanup of pollution * MCS-90 (transporters) (Federal Requirement) $2 M / Occurrence $2 M / Aggregate Sudden & Accidental Pollution * Automobile (transporters) $ 1 M / Claim $ 2 M / Aggregate Errors in professional services * Environmental Errors & Omissions $ 5 M / Occurrence $10 M / Aggregate Pollution of property Environmental Pollution $5 M / CSL Occ. $10 / Aggregate Increased limits and coverage breadth General Limits Coverage ADDITIONAL Liability Insurance

24. Proof of Insurance 1. Certificate of Insurance Broker Insured (your contractor) Insurance companies (NAIC number) Rating (A.M. Best – A:VII or equivalent) Type of Insurance Basis of coverage and scope Policy number, period, $ limits and deductible

25. Certificate of Insurance MOST IMPORTANT WORDS This certificate of insurance is not an insurance policy and does not amend, extend or alter the coverage afforded by the policies below.

26. Contractor’s Insurance Contractor is the INSURED Pays for legal defense of the contractor Pays claims for which the contractor is found liable Pays for investigation of claims against the contractor Contractor’s Insurance does not provide insurance coverage for the University “ IF” the University has losses it can file against the contractor and proceed with legal action to enforce the indemnification “ IF” the University is sued, it can file against the contractor and proceed with legal action to enforce indemnification

27. University as Additional Insured General and Automobile Liability Insurance Policies University is an INSURED Direct Access to Contractor’s Insurance policy Report loss and file claim Doesn’t have to enforce indemnification in the contract REQUIRES A WRITTEN AMENDMENT TO THE INSURANCE POLICY BY: ENDORSEMENT or such language shall be contained in the policy

28. Other CSU Endorsements Coverage shall not be canceled by either the contractor or the insurance carrier, except after 30 days prior written notice to University. (ALL) Contractor’s coverage is primary as respects the University. (CPDC CGC) University coverage shall be excess of coverage provided by contractor. (CPDC CGC) University shall not by reason of inclusion as an additional insured incur liability for payment of premiums for the policy. (CPDC CGC)

29. Proof of Insurance 2 Endorsement of Insurance Policies as required in your Insurance Specifications Endorsement Form “ Endorsement” in title of form (“changes the policy”) Policy number, Insurer Type of policy & policy period Name of insured (YOU) being added Purpose & scope of endorsement Identification of project or contract Authorizing signature Copy of Policy if such language is contained therein

30. Basic Insurance Endorsements ExO 849 30 days advance written notice of cancellation of any of the coverage Notice of Cancellation ALL Ownership and/or operation of automobiles (owned, scheduled, non-owned) Additional Insured Automobile Liability Operations, Products, Completed Operations their “ WORK” Additional Insured General Liability Language Endorsement Policy Type

31. Additional Insurance Endorsements CPDC CGC University shall not be reason of inclusion as additional insureds incur liability for payment of premiums Open Form ALL University insurance shall be excess of the contractor’s and shall not contribute with it Open Form General & Automobile Liability Insurance coverage shall be primary as respects the University Open Form General & Automobile Liability Language Endorsement Policy Type

32. Special Endorsements Provides funding for cleanup of pollution MCS-90 Automobile Liability (hazmat) Reinstates coverage normally excluded from automobile policies Sudden & Accidental Pollution Automobile Liability (hazmat) Policy limits in full apply to this project or contract (not all the contractor’s operations for the year) Amendment of Limits General Liability (CPDC CGC) Language Endorsement Policy Type

33. Special Endorsements Insurer waives rights to recover from YOU for any payments they make for injury or damage Waiver of Subrogation Builder’s Risk CPDC CGC Insurance will pay University for loss as respects $ interest Loss Payee Builder’s Risk CPDC CGC Insurer waives rights to recover from YOU for any payments they make for injury or damage Waiver of Subrogation Workers’ Comp & Employers’ Liability (ALWAYS) Language Endorsement Policy Type

34. Professional Liability Policies “Errors and Omissions” Claims Made basis of coverage (Limited time in which to report a claim vs. Occurrence basis) Critical Information Retro Date (when coverage began) Extended Claims Reporting Period (policy period plus 30, 60, 90 days) Claims reporting procedures (so you can report claim directly within limited time frame) Declaration Sheet

35. Excess & Umbrella Insurance Follow form of underlying coverage? Identifies underlying policy Exclusions or gaps in coverage Provide additional coverage? Matching policy period? Declaration sheet

36. Insurance Policy Limits general liability Limits based upon value of the contract ExO 849 - $1m/2m CPDC CGC - $5m/5m < $5,000,000 Limits based upon risk of the contract operations, products, completed operations HOW MUCH CAN BE LOST?

37. Questions ?

38. THANK YOU

39. References CSU Executive Order 849 http://www.calstate.edu/eo/EO-849.pdf CSU Contract Services and Procurement http://www.calstate.edu/CSP/crl/crl.shtml CSU Capital Planning, Design & Construction (CPDC) http://www.calstate.edu/cpdc/CM/CGC.shtml CSU Insurance Requirements In Contracts http://www.csurma.org/___

40. Joseph C. Risser Chartered Property Casualty Underwriter (CPCU) Associate of Risk Management – Public Entities (ARM-P) Director, Risk Management, California Polytechnic State University, San Luis Obispo Executive Committee, Board of Directors, California State University Risk Management Authority (CSURMA) [email_address] 805-756-6755 office 805-756-1602 fax