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University Link Light Rail Project. Owner Controlled Insurance Program (OCIP). Presented by Sound Transit Risk Management Division. University Link Light Rail Project. What is an Owner Controlled Insurance Program (OCIP)? An OCIP is a controlled insurance program that insures:

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slide1

University Link Light Rail Project

Owner Controlled Insurance Program (OCIP)

Presented by

Sound Transit Risk Management Division

university link light rail project
University Link Light Rail Project
  • 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 activities
  • associated with the project (if any).

2

slide3

Higher Limits

Better Coverage

Terms &

Conditions

Dedicated

Products & Completed

Operations Coverage

OCIPBENEFITS

Improved

Cash Flow

Reduced

Loss Litigation

Increased

M/W/DBE

Participation

Improved

Safety

Performance

Greater

Claims Management

Control

university link light rail project4
University Link Light Rail Project
  • 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

4

university link light rail project5
University Link Light Rail Project
  • 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.)

5

university link light rail project6
University Link Light Rail Project
  • 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
university link light rail project7
University Link Light Rail Project

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.
university link light rail project8
University Link Light Rail Project
  • 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

8

university link light rail project9
Sound 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.

University Link Light Rail Project
university link light rail project10
Contractor 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

University Link Light Rail Project
university link light rail project11
University Link Light Rail Project
  • 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.

11

university link light rail project12
University Link Light Rail Project
  • 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)
university link light rail project13
University Link Light Rail Project
  • 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
university link light rail project15
University Link Light Rail Project

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.
university link light rail project16
University Link Light Rail Project

Incident Reporting Process Flow

Incidents Reported by Contractors, Sound Transit Employees, or Security

Incident Report Completed by Contractor or Subcontractor

Incident Report Completed by Sound Transit Employees

Incident Report Completed by Security

Sound Transit

Resident Engineer

OCIP Administration Representative

Sound Transit Risk Management Division

Sound Transit Construction Safety

Insurers

[CGL] [BR] [CPL]

university link light rail project17
University Link Light Rail Project

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.
university link light rail project18
University Link Light Rail Project

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
university link light rail project19
Majority of Claims:

3rd Party CGL Claims

Builders Risk Claims

University Link Light Rail Project

OCIP Insurance Claims

Commercial General Liability

Builders Risk

Contractors Pollution Liability

3rd Party

1st Party

3rd Party

university link light rail project20
University Link Light Rail Project
  • 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
university link light rail project21
University Link Light Rail Project

Claims Against Sound Transit Reporting Process Flow

Claim Form Completed

3rd Party Claims Against ST

Formal Claims Presented to Sound Transit

by Members of the General Public

Delivered/Mailed to

Sound Transit

Board Administrator

Sound Transit

Risk Management Division

Claims Group

Insurer

[CGL]

OCIP

Admin. Representative

Sound Transit Resident Engineer

Sound Transit Construction Safety

Contractor

university link light rail project22
University Link Light Rail Project
  • 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

university link light rail project23
University Link Light Rail Project

Claims Against Contractor Reporting Process Flow

Attorney Demand Letter, Other Written Demand, Summons and Complaint

Delivered/Mailed to

Contractor

3rd Party Claims Against Contractor

Claims Presented to Contractors

by Members of the General Public

Sound Transit Resident Engineer

OCIP

Admin. Representative

Sound Transit

Risk Management Division

Claims Group

Sound Transit Construction Safety

Insurer

[CGL]

university link light rail project24
University Link Light Rail Project

U-LINK

OCIP POLICIES

SOUND TRANSIT

CONTRACT

SOUND TRANSIT

U-LINK

OCIP MANUAL

Contract for

Construction

Contracts for

Insurance

Contract Document

24

university link light rail project25
University Link Light Rail Project
  • 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)
university link light rail project26
University Link Light Rail Project
  • 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)
university link light rail project27
University Link Light Rail Project
  • 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)
university link light rail project28
University Link Light Rail Project
  • Liability Claims – Claim Management
  • ST Risk Management Division coordinates claim process
    • Quality control of claims handling process
    • Monitors claims adjusting and investigation
    • Note: 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)
university link light rail project29
University Link Light Rail Project
  • 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)
university link light rail project30
University Link Light Rail Project
  • 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)
university link light rail project31
University Link Light Rail Project

Builders Risk Claim Reporting Process Flow

1st Party Builders Risk Claims

Contractor

Receives Claim

or

Completes ST Claim Form

Builders Risk Claims Asserted Against Contractors or Reported by Contractors

Sound Transit Resident Engineer

OCIP

Administration Representative

Sound Transit

Risk Management Division

Sound Transit Construction Safety

Insurer

[BR]

university link light rail project32
University Link Light Rail Project
  • 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)
university link light rail project33
University Link Light Rail Project

Contractors Pollution Liability Claim Reporting Process Flow

3rd Party Contractors Pollution Liability Claims

Contractor Pollution Liability Claims Reported by Contractors

Contractor

Provides an Immediate Verbal Report

Followed by a

Completed Incident Report Form

Sound Transit Resident Engineer

Sound Transit Construction Safety

Sound Transit

Risk Management Division

Claims Group

OCIP

Administration Representative

Insurer

[CPL]

university link light rail project34
Contractor 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

University Link Light Rail Project

34

university link light rail project35
University Link Light Rail Project
  • 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