third-party contract insurance guidelines - bcn

U n i v e r s i t y R i s k M a n a g e m e n t & I n s u r a n c e A s s o c i a t i o n

U R M I A W h i t e P a p e r

Third-Party Contract Insurance Guidelines

October 2009

John P. McLaughlinManaging Director,

Higher Education Practice Arthur J. Gallagher & Co.

Michael J. GansorRisk Manager

West Virginia University

Editor:Christie Wahlert

URMIA

This URMIA white paper is published by the University Risk Management and Insurance Association (URMIA), P.O. Box 1027, Bloomington, IN 47402-1027. URMIA is an incorporated nonprofi t professional organization.

Editing and layout of the October 2009 URMIA white paper was completed by Christie Wahlert, URMIA, Bloomington, Indiana, and printing was completed at Indiana University Printing Services, Bloomington, Indiana.

There is no charge to members for this publication. It is a privilege of member-ship. Additional copies are available by contacting the URMIA National Offi ce at the address above or at [email protected]. Membership information is also available.

© LEGAL NOTICE AND COPYRIGHT: The material herein is copyright October 2009 URMIA; all rights reserved.

Table of Contents

ESTABLISHING CONTRACTUAL INSURANCE GUIDELINES 3GENERAL INSURANCE REQUIREMENTS FOR ALL INSURERS 5INSURANCE COVERAGES Commercial General Liability Automobile Liability Workers’ Compensation Umbrella Liability Professional Liability Pollution Liability Property - Tenants/Lessees Aviation Builders Risk Bonds Self-Insurance (including Captive Insurance)

77778891010101011

INSURANCE REQUIREMENTS Construction/Renovation Contracts Vendor Agreements Consulting and Professional Services Agreements (Architects, Engineers, Environmental Consultants) Short-Term Lease Agreements/Special Events Commercial Lease of Premises

12131720

2527

CONTRACT LANGUAGE Indemnity Hold Harmless and Indemnifi cation Agreements and Non Waiver Independent Contractor Assignment

3131313232

Appendices APPENDIX 1 - CONSTRUCTION / RENOVATION CONTRACTS / BUILDERS RISK / INSTALLATION FLOATER OPTIONS

35

APPENDIX 2 - VENDOR AGREEMENTS 45APPENDIX 3 - CONSULTING AND PROFESSIONAL SERVICES (ARCHITECTS, ENGINEERS, AND INFORMATION TECHNOLOGY)

47

APPENDIX 4 - SHORT-TERM LEASE AGREEMENTS, SPECIAL EVENTS, AND COMMERCIAL LEASE OF PREMISES

57

APPENDIX 5 - SCHEDULE OF ADDITIONAL INSURED ENDORSEMENTS 61APPENDIX 6 - DEFINITIONS OF COMMON TERMS 63APPENDIX 7 - EXAMPLE REQUEST LETTERS 67

Third-Party Contract Insurance Guidelines 1

To: URMIA Members

From: Michael J. Gansor, Risk Manager West Virginia University

Re: Th ird-Party Contract Insurance Guidelines

Th e 2009 edition of the Th ird-Party Contract Insurance Guidelines is an informational tool to assist members in better understanding some of the insurance coverage and policy form nuances associated with the myriad contracts risk managers are asked to review and opine on in the course of our duties. We hope these guidelines will prove to be a valuable tool in helping you manage your contractual risks.

We must stress that the Th ird-Party Insurance Guidelines are just that…guidelines. Each state, each institution, each insurance carrier, and each individual contract comes with its own unique set of condi-tions and circumstances. It is incumbent on those responsible for managing contracts at your institution to ensure the terms, conditions, and insurance coverage requested meets the needs of your specifi c situa-tion. No guideline, no matter how complete, is appropriate for all situations!

I would like to thank our colleagues in the Gallagher Higher Education Practice for their help in prepar-ing this document. Specifi cally, I would like to thank Liz McHugh, Priscilla McCoy, Laura O’Malley, and John McLaughlin. Without their assistance, this valuable resource could not have been developed.

Sincerely, Michael J. Gansor

“The Third-Party Insurance

Guidelines are just that…

guidelines. Each state,

each institution, each

insurance carrier, and

each individual contract

comes with its own unique

set of conditions and

circumstances.”

—Michael J. Gansor, Risk Manager, West Virginia University


Every contract has risks that must be reviewed from the perspective of protecting [College/University’s] assets. Th is document is designed to provide you with guidelines and tools to help you manage those risks when you contract on behalf of [College/University]. Th e inherent parts of contract management are to:

Evaluate the risks involved1. Decide whether to avoid, transfer, or accept the risks2. Implement appropriate risk transfer and/or risk fi nancing mechanisms3.

Read the contract thoroughly, and anticipate events or situations that could happen within the scope of work outlined. Ask yourself:

Who are all of the parties involved?1. What kind of work is being done?2. What type of accidents or losses could occur, 3. and what is the worst case scenario in terms of fi nancial loss and/or injury to persons or prop-erty?Are the responsibilities for the risks appropri-4. ately placed with those in the best position to control them?What is the ability of the parties to manage the 5. risks and absorb the losses?Is the contract legal and enforceable?6.

Within the contract, risk transfer is accomplished through a combination of indemnifi cation, hold harm-less, and waiver of subrogation clauses. Insurance is commonly required as a means of providing the fi nancial support to back the Indemnitor’s obligation to hold the Indemnitee harmless.

These guidelines were created

to assist staff who review,

approve, or manage contracts.

They are guidelines only. The

purpose of this document is to

provide examples of specifi c

coverages, terms, and conditions

you may want to consider

when asked to comment on

insurance requirements in

your institution’s contracts.

The documents and contract

language specifi ed here are

intended to be template

guidelines or examples of best

practices. Each one should be

adjusted to fi t your specifi c

institution’s risk profi le. A legal

opinion should be sought before

making any changes to existing

contract language.

Key Note About the Information and Samples

Included in This Document

Establishing Contractual Insurance Guidelines


Th e goal of [College/University] is to establish contract guidelines for insurance coverage that can be consistently applied with few exceptions. Th is can occur if [College/University] decides on the limits that it will require and sticks to that decision. Th is may involve withstanding pressure from contractors, architect and engineering (A/E) fi rms, and brokers. As an example, many of the large A/E fi rms attempt to eliminate all Errors and Omissions (E&O) requirements in their contracts, even though the fi rm car-ries professional liability coverage.

To ensure the continued success of [College/University’s] contract review program, once insurance re-quirements have been set, they must be communicated in all bid proposals prior to awarding the contract. Th e program will not be successful if the insurance is negotiated after the contractor has been selected.


LEVEL AM BEST RATING CHART CATEGORYA++ Superior

A+ Superior

A Excellent

A- Excellent

B++ Very Good

B+ Very Good

B Good

B- Good

C++ Fair

C+ Fair

C Marginal

C- Marginal

D Below minimum standardsFigure 1: AM Best’s Rating Chart

General Insurance Requirements for All Insurers

Th ese general requirements should be incorporated into every contract and should not to be waived without consulting with the risk management department.

[College/University] requires that all insurers:Be licensed or approved to do business within the state of 1. [your state].Write required insurance on an “occurrence” basis (professional liability and pollution liability 2. are acceptable written on a “claims-made” basis).Name 3. [College/University] and its [Board of Regents/Trustees], offi cers, employees, agents, and volunteers as “Additional Insureds” on general liability and other policies as specifi ed by the con-tract. Please refer to the Contract Language section of this white paper for acceptable wording for this requirement.Possess a minimum A.M. Best’s Insurance Guide rating of A VII. A.M. Best rating is composed 4. of two parts: the letter denotes the company’s fi nancial strength level (see Figure 1), and the Ro-man numeral denotes fi nancial size. Please visit http://www3.ambest.com/ratings/default.asp for further explanation and to look up insurance company ratings.

Provide a minimum of 30 days advance written notice of cancellation, material change, or non-5. renewal of policies required under the contract to [College/University].


Provide a completed Certifi cate of Insurance containing the following information:6. Name and address of agent, phone number, and fax number• Name of insurance company(ies) and policy number(s)• Policy period• Name and address of insured• Description of coverage(s)• Policy limits• Special instructions or terms of coverage (For example: Addition of • [College/University] as additional insured, waiver of subrogation, identifi cation of project or operations with respect to certifi cate being issued)[College/University]• listed as the certifi cate holderSignature of the insurer’s agent or representative and date•

[College/University]7. requires that all policies of insurance be on a primary basis, non-contributo-ry with any other insurance coverages and/or self-insurance carried by [College/University].[College/University]8. requires the contractor provide a renewal certifi cate at least 15 days prior to expiration.[College/University]9. may also require that proof of professional liability and pollution liability coverages be provided for up to three (3) years after the completion of a project.Th e Contractor agrees that the insurance requirements specifi ed in the contract do not reduce 10. the liability Contractor has assumed in the indemnifi cation/hold harmless section of the con-tract.

[College/University] reserves the right to approve the security of the insurance coverages provided by the insurance company terms, conditions, and the Certifi cate of Insurance. Failure of the Contractor to fully comply with these requirements during the term of the contract will be considered a material breach of contract and will be cause for immediate termination of the contract at the option of [College/Univer-sity].


Commercial General Liability Th is coverage is required in all [College/University] contracts (including short-term lease agreements). Bid specifi cations and contracts should state that required coverage is ISO CG0001 or a substitute form providing equivalent coverage. Coverage is to include:

Premises and Operations• Personal Injury/Advertising Liability• Products/Completed Operations• Liability assumed under an Insured Contract (including tort liability of another assumed in a • business contract)Independent Contractors•

Automobile Liability Auto liability insurance coverage is required for contracts contemplating any use of an automobile, in-cluding construction projects, premises lease agreements, and service contracts. Bid specifi cations and contracts should state that required coverage shall be writ-ten on standard ISO form CA0001 or a substitute form providing equivalent liability coverage. If necessary, the policy shall be endorsed to provide contractual liability coverage equivalent to that provided in the 1990 and later editions of CA0001. Contracts must contain a require-ment that the contractor provide business automobile li-ability coverage that includes:

All vehicles owned, leased, hired, non-owned, and • employee non-owned vehiclesPersonal Injury Protection (when applicable)•

Workers’ Compensation [College/University] requires all contractors, lessees, and vendors to maintain workers’ compensation insurance with statutory limits. Employers’ liability is also required with minimum limits of $500,000 Each Accident Limit / $500,000 Disease-Policy Limit / $500,000 Disease-Each Employee Limit.

NOTE: If contractor, lessee, or

vendor is a sole proprietor, he or

she may not be required by law

to have workers’ compensation

coverage. But if the sole

proprietor has any employees,

workers’ compensation is

required for the employees.

Also, in some states, if the

college or university does not

ensure that contractors maintain

workers’ compensation coverage,

the college or university will

be liable for the payment

of benefi ts and insurance

premiums.

Key Note About Workers’ Compensation

Insurance Coverages


Contractors and lessees shall be responsible for workers’ compensation insurance for subcontractors or sub-lessees who directly or indirectly provide services or lease premises under [College/University’s] con-tract. Th is coverage must include statutory coverage for states in which employees are engaging in work. If there is an exposure of injury to the contractor’s employees under the U.S. Longshore and Harbor Workers’ Compensation Act, the Jones Act, or under laws, regulations, or statutes applicable to maritime employees, coverage shall be included for such injuries or claims.

Umbrella LiabilityAn umbrella liability policy (or excess liability) may be used to provide additional commercial general liability, automobile liability, and employers’ liability limits to meet [College/University’s] minimum cover-age requirements.

Professional Liability (Errors and Omissions)Professional liability insurance protects against losses that occur when a “professional” errors in judg-ment, planning, and design could result in economic loss to [College or University]. Th erefore, there can be risks to the institution associated with errors or allegations of errors in the professional’s work product or judgment.

Professional liability may have a diff erent meaning when it relates to insurance rather than a “type” of the university contract. In order to determine if you should require professional liability insurance, ask yourself:

Is the professional licensed or certifi ed (i.e. architect, consultant, paramedic, attorney, engineer, 1. etc.)?Will the information developed by the professional be used in a decision making process within 2. the institution that could create a liability (i.e. such as clinical trials, etc.)?

If the answer is yes to either of these questions, professional liability insurance should be required. Th e types of losses that can occur under such circumstances are often excluded under general liability policies. Th ey can be covered through separate professional liability insurance policies, also known as “errors and omissions” (E&O) liability insurance. Examples of services that would require professional liability coverage include, but are not limited to:

Accountants Financial consultants

Appraisers Insurance/risk management consultants

Architects Investment consultants

Attorneys Medical professionals

Auditors Professional managers (museums, parks, gardens, etc.)

Computer/software design Project management (construction, design)

Consultants Property managers/real estate agents

Childcare workers/facilities Social workers

Engineers TeachersFigure 2: Examples of Services Requiring

Professional Liability Coverage


Because professional liability insurance is generally writ-ten on a claims-made basis, there is a concern about cov-erage for latent defects or design errors that may result in claims after the contract has been completed. One solu-tion is to require the contractor to maintain the coverage for a specifi ed period after the project has been completed or to purchase an extended reporting period, otherwise known as “tail coverage.” It should be [College/University’s] standard requirement for professional liability to require a three-year extended reporting period for all claims-made policies, except for construction including design build contracts, in which a fi ve-year or six-year extended reporting period for all claims-made policies should be re-quired.

[College/University] may also require that proof of pro-fessional liability coverage be provided for up to three (3) years after the completion of a project.

Pollution Liability (including Contractors’ Pollution Liability Coverage) Pollution liability coverage should be considered whenever the work at issue involves the handling of hazardous material or the operation of the contractor could create or exasperate an environmental haz-ard.

Th e contractor should provide pollution liability coverage to cover bodily injury; property damage, in-cluding natural resource damage, cleanup costs, removal, storage, disposal, and or use of the pollutant; and defense, including costs and expenses incurred in the investigation, defense, or settlement of claims. Coverage should apply to the sudden and gradual pollution conditions resulting from the escape or re-lease of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids, or gases, natural gas, waste materials, or other irritants, contaminants, or pollutants, including asbestos.

Pollution liability coverage is normally written on a claims-made basis. Th erefore, the contractor needs to warrant that any retroactive date applicable to coverage under the policy precedes the eff ective date of the contract and that continuous coverage will be maintained or an extended reporting or discovery period will be exercised for a period of three years (or desired number of years), beginning from the time that work under this contract is completed.

If the contractor is responsible for removing any pollutants from a site, then the contractor will need to cover its automobile exposure for transporting the pollutants from the site to an approved disposal site. Auto liability coverage should be endorsed to include the required auto pollution endorsements and Mo-tor Carrier Act Endorsement, MCS 90.

NOTE: The contract manager

will need to make sure that

the contractor has provided

evidence of the extended

reporting period coverage at the

end of the project and before all

fi nal payments to the contractor

have been made.

Key Note About Professional Liability


Property - Tenants/Lessees Th is insurance is required for tenants and lessees. [Tenant/Lessee] shall obtain commercial property in-surance covering [Tenant/Lessee’s] property, fi xtures, equipment, improvements, and betterments. Perils insured should be equivalent to ISO special causes of loss form CP1030, and the valuation of covered property should be the replacement cost. A waiver of subrogation should be included in all lease agree-ments.

Aviation Aviation insurance may be required for various types of activities, such as charters and land use permits. Aircraft liability insurance should cover all owned, hired, and non-owned aircraft with a combined single limit per occurrence for bodily injury and property damage of not less than $10,000,000 with no per seat passenger limitation. If the charter is of a large, commercial-sized airplane—some carriers classify this as any aircraft having over 45 seats—then higher limits should be required.

Builders Risk/Installation Floater Builders risk insurance is designed to cover buildings and construction materials while in the course of construction. Builders risk insurance is a form of property insurance that protects the construction project against loss or damage caused by a variety of perils, such as fi re, wind, or hail.

Installation fl oaters are similar to builders risk insurance policies in that they are designed to cover damage to material and equipment to be installed in an “existing building.” Installation fl oaters are required from contractors performing a specialized job on an existing building or installing equipment or materials that are not included in a construction project contract. An example would be a contract to replace the plumbing and fi xtures in a bathroom of an existing building.

Bonds A bond is a three-party contract in which the surety company guarantees the performance or honesty of the contractor to [College/University]. Contractors typically are required to provide up to three types of bonds on a construction project.

A bid bond is commonly required in competitive bid situations. It is submitted with the bid and guarantees that if the contractor is awarded the job, it will agree to perform the work at the price quoted and will provide additional bonds as required by the construction contract. If the contractor declines to enter into a contract to perform the work at the agreed-upon price, the bid bond will reimburse [College/University] the diff erence between the defaulting contractor’s bid and the next lowest bid, up to the bid bond penal amount.

A performance bond guarantees that the contractor will perform the work in accordance with the construction contract and related documents, thus protecting [College/University] from fi nancial loss up to the bond limit in the event the contractor fails to fulfi ll its contractual obligations.

Th e general contractor is responsible for contracting for all materials and labor needed for the project and for paying for such materials and labor in accordance with the contract provisions. Th e payment bond guarantees that suppliers and subcontractors will, in fact, be paid for materials and labor furnished to the contractor. Th e ultimate purpose of the payment bond is to guarantee [College/University] delivery of a project that is free of liens.


Self-Insurance (including Captive Insurance Arrangements) Many large organizations today are self-insured or have captive insurance companies. Th is means that instead of buying insurance with small deductibles, they choose to purchase insurance to cover them-selves for catastrophic events and self-insure the predictable losses. Deductibles can range from the hun-dreds of thousands to the millions of dollars. In certain limited circumstances, generally involving very large and fi nancially secure companies which have the fi nancial capability to pay claims for damages and losses related to their activities, [College/University] may, at its discretion, accept proof of self-insurance for some or all of the insurance requirements set forth under these guidelines. If so, [College/University] should require the company to certify that its program is funded to actuarial projected losses.


Th e following are examples of insurance requirements for the following types of contracts:Construction/renovation projects1. Vendor agreements2. Consulting and professional services agreements, such as architects, engineers, and environmental 3. consultantsShort-term lease agreements (for those parties using 4. [College/University] premises/buildings for special events)Commercial Lease Agreements of 5. [College/University]-Owned Premises

Th e next few pages contain examples of minimum insurance requirements for each of the above situations. Th orough explanations of the insurance requirements for each of these situations are contained in the appendices, along with suggested language that may be used as inserts into the insurance requirements section of [College/University’s] contracts.

NOTE: The size and scope of

the contract and the potential

exposure will dictate the

minimum level of coverage

required. The suggested

minimum limit is $1,000,000.

Key Note About Insurance Requirements

Insurance Requirements


Insurance Requirements: CONSTRUCTION/RENOVATION PROJECTS

INSURANCE REQUIREMENTS

MINIMUM LIMITS NOTES

Commercial General LiabilityISO form CG0001 or a substitute form provid-ing equivalent liability coverage

ISO endorsement CG2010 – see notes


$1,000,000 each occurrence; see Appendix 1 for full description of required limits

$2,000,000 General Aggregate

$2,000,000 Products/Completed Operations Aggregate

CGL must include coverage for liability arising from prod-ucts-completed operations and liability assumed under an insured contract.

If CGL insurance has a general aggregate limit, then ISO en-dorsement CG2503 (03/97 Edition) or its equivalent should be added. The Designated Construction Project(s) General Aggregate Limit must be maintained for the duration of the agreement or longer, if required and so stated in the contract. The size and scope of the contract and the poten-tial exposure will dictate the minimum level of coverage required.

The designated construction project(s) (per project aggregate) general aggregate and the products/completed operations aggregate should be twice the minimum required occurrence limit.

[College/University] and its [Board of Regents/Trustees], of-fi cers, employees, agents, and volunteers should be in-cluded as an additional insured using ISO additional insured endorsement CG2010 and CG2037 (completed operations) or a substitute providing equivalent coverage.

There should be no endorsement or modifi cation of the CGL limiting the scope of coverage for liability assumed under contract or liability arising from pollution, explosion, collapse, underground property damage, or damage to the work.

This insurance shall apply as primary insurance/non-con-tributory with respect to any other insurance or self-insur-ance programs offered to [College/University].


Insurance Requirements: CONSTRUCTION/RENOVATION PROJECTS (continued)



Business Automobile CoverageISO form CA0001 or a substitute form providing equivalent liability coverage

ISO endorsement CA9948 – see notes

ISO endorsement MCS90 – see notes

$1,000,000 each accident limit for bodily injury and property damage

Coverage must include all owned, leased, hired, non-owned, and employee non-owned vehicles and, where applicable, personal injury protection.

If necessary, the policy shall be endorsed to provide con-tractual liability coverage equivalent to that provided in the 1990 and later editions of ISO form CA0001.

Pollution liability coverage equivalent to that provided by ISO pollution liability-broadened coverage for autos en-dorsement CA9948 and the Motor Carrier Act endorsement MCS90 shall be included if the contractor is responsible for transporting and disposing of hazardous materials.

Contract should state that the contractor waives all rights against [College/University] and its [Board of Regents/Trust-ees], offi cers, employees, agents, and volunteers for recovery of damages to the extent these damages are covered by the business auto liability insurance (or under any applicable auto physical damage coverage).

Workers’ Compensation (Statutory) and Employers’ Liability

Coverage A – Workers’ Compensation, in compliance with the laws of the state of [your state]; and Coverage B – Employers’ Liability, $500,000/$500,000/ $500,000

This coverage must include statutory coverage for states in which employees are engaging in work. If there is an exposure of injury to contractor’s employees under the U.S. Longshore and Harbor Workers’ Compensation Act, the Jones Act, or under laws, regulations, or statutes applicable to maritime employees, coverage shall be included for such injuries or claims. The U.S. Longshore and Harbor Workers’ Compensation Act coverage is provided by NCCI endorse-ment WC000106A, and the Maritime Coverages are provided by NCCI endorsement WC000201A.

Contract should state that the contractor waives all rights against [College/University] and its [Board of Regents/Trust-ees], offi cers, employees, agents, and volunteers for recovery of damages to the extent these damages are covered by workers’ compensation and employers’ liability insurance. The NCCI endorsement to use for this coverage is WC000313 Waiver of Our Right to Recover from Others.

Umbrella Liability Varies by project Required if contract requires limits higher than $1,000,000.

Professional Liability(Design Errors and Omissions Liability)

$1,000,000 per claim per policy year

Required if the contractor is performing any type of design/build for a particular project. [College/University] may re-quire proof that this coverage be provided for up to three (3) years after project completion. Policy is to be on a primary basis if other professional liability is carried.


Insurance Requirements: CONSTRUCTION/RENOVATION PROJECTS (continued)



Builders Risk Insurance/Installation Floater – Completed Value BasisProperty

Hard construction values of project

Required on MOST construction projects. Two options are available: 1) contractor provides coverage or 2) [College/University] provides coverage (see Appendix 1). One of these options must be included in the contract/bid package. For assistance in determining which option to use, please con-tact risk management.

Pollution Liability Varies by project Can be obtained through the contractors’ general liability coverage by including the Limited Pollution Liability Exten-sion ISO endorsement CG 2415 (10/01 Edition). However, a separate contractors’ pollution legal liability policy is also acceptable. [College/University] and its [Board of Regents/Trustees], offi cers, employees, agents, and volunteers should be included as an additional insured with respects to liabili-ty and defense of suits arising out of activities performed by or on behalf of contractor, including completed operations.

NOTE: Contractors are required to ensure that all subcontractors are insured under the contractors’ policies. All subcontractors and sub-tier contractors are required to comply with the coverage and limit requirements outlined in this document.


Insurance Requirements: VENDOR AGREEMENTS



Commercial General LiabilityISO form CG0001 (12/04 Edition) or its equiva-lent

ISO Endorsement CG2026 – see notes

$1,000,000 per occurrence bodily injury and property damage


$2,000,000 Products/Completed Operations Aggregate

These insurance requirements are for vendors (those indi-viduals or businesses who sell their product to others while on [College/University] premises). Insurance must be main-tained for the duration the vendor is on university premises.

If CGL insurance has a general aggregate limit, then ISO en-dorsement CG2504 (03/97 Edition) or its equivalent should be added. The Designated Location(s) General Aggregate Limit must be maintained for the duration of the agreement or longer, if required and so stated in the contract. The size and scope of the contract and the potential exposure will dictate the minimum level of coverage required.

The general aggregate and the products/completed operations aggregate should be twice the minimum required occurrence limit.

[College/University] and its [Board of Regents/Trustees], of-fi cers, employees, agents, and volunteers should be in-cluded as an additional insured using ISO additional insured endorsement CG2026 or a substitute providing equivalent coverage.

There should be no endorsement or modifi cation of the CGL limiting the scope of coverage for liability assumed under contract or liability arising from pollution.

This insurance shall apply as primary insurance with respect to any other insurance or self-insurance programs offered to [College/University].



Coverage must include: All owned, leased, hired, non-owned, and employee non-owned vehicles and, where ap-plicable, Personal Injury Protection.


Coverage A, in compliance with the laws of the state of [your state]; and Coverage B, $500,000/$500,000/ $500,000

This coverage must include statutory coverage for states in which employees are engaging in work.


Insurance Requirements: VENDOR AGREEMENTS (continued) INSURANCE

REQUIREMENTSMINIMUM LIMITS NOTES

Liquor Liability $1,000,000 per occurrence bodily injury and property damage

$1,000,000 aggregate

If the vendor is operating a business that distributes, sells, or serves alcoholic beverages or if its activities require a liquor license, the vendor should maintain liquor liabil-ity insurance and shall include [College/University] and its [Board of Regents/Trustees], offi cers, employees, agents, and volunteers as an additional insured.

Umbrella Liability Varies by project Required if contract requires limits higher than $1,000,000.

NOTE: Depending on the nature of the product being sold, higher limits of liability may be required.


Insurance Requirements: CONSULTING AND PROFESSIONAL SERVICES AGREEMENTS



Commercial General LiabilityISO form CG0001 or its equivalent



Insurance must be maintained for the duration of the con-tract or longer if so stated in contract.

The general aggregate should be twice the minimum required occurrence limit.

Business Automobile CoverageISO form CA0001 or a substitute form provid-ing equivalent liability coverage


Coverage must include: All owned, leased, hired, non-owned, and employee non-owned vehicles and, where ap-plicable, Personal Injury Protection.




Professional Liability Insurance

$1,000,000 per claim/loss

$2,000,000 Annual Aggregate

The scope of work, size of contract, and potential for loss may require higher limits.

Required whenever the service provider is required to be licensed by the state of [your state] and/or where the consul-tant’s errors or allegations of errors in judgment, planning, design, etc., could result in economic loss to [College/Uni-versity]. The policy should cover professional misconduct or lack of ordinary skill for those positions defi ned in the scope of services in the contract.

[College/University] shall require that the consultant/service provider provide proof of coverage for up to three (3) years after the completion of the project.


Insurance Requirements: CONSULTING AND PROFESSIONAL SERVICES AGREEMENTS (continued)



Professional Liability for IT Technology, including Cyber Risk

$1,000,000 each claim/loss


For contracts over $500,000, recommend $5,000,000 each claim/loss


The policy shall cover professional misconduct or lack of ordinary skill for those positions defi ned in the scope of services of this contract.

In the event that the professional liability insurance re-quired by the contract is written on a claims-made basis, contractor warrants that any retroactive date under the policy shall precede the effective date of this contract; and that either continuous coverage will be maintained or an extended discovery period will be exercised for a period of two (2) years beginning at the time work under this contract is completed.

If such insurance is maintained on an occurrence form basis, consultant should maintain such insurance for an ad-ditional period of one (1) year following termination of the contract. If such insurance is maintained on a claims-made basis, consultant should maintain such insurance for an additional period of three (3) years following termination of the contract.

If consultant contends that any of the insurance it main-tains pursuant to other sections of this clause satisfi es this requirement (or otherwise insures the risks described in this section), then consultant should provide proof of same.

The insurance should provide coverage for the following risks:

Liability arising from theft, dissemination, and/1. or use of confi dential information (a defi ned term including, but not limited to, bank and credit card account information or personal information, such as name, address, social security numbers, etc.) stored or transmitted in electronic formNetwork security liability arising from the unauthor-2. ized access to, use of, or tampering with computer systems, including hacker attacks or inability of an authorized third party to gain access to your ser-vices, including denial of service, unless caused by a mechanical or electrical failureLiability arising from the introduction of a com-3. puter virus into, or otherwise causing damage to, a customer’s or third person’s computer, computer system, network, or similar computer related prop-erty and the data, software, and programs thereon.


Insurance Requirements: CONSULTING AND PROFESSIONAL SERVICES AGREEMENTS (continued)



Professional Liability for IT Technology, including Cyber Risk

Additional Requirements:The policy should provide a waiver of subrogation 1. [College/University]2. and its [Board of Regents/Trust-ees], offi cers, employees, agents, and volunteers should be included as additional insureds with respect to liability arising out of the activities per-formed by, or on behalf of, the consultant.


Insurance Requirements: SHORT-TERM LEASE AGREEMENTS/SPECIAL EVENTS






Contracts for lease of [College/University] owned premises for special events normally require lessees to provide com-mercial general liability.

Agreements must include Waiver of Subrogation language that clearly states that the insurer paying any claim aris-ing by reason of any operations under the contract will not seek reimbursement from [College/University]. This can be accomplished by the use of ISO endorsement CG2988 Waiver of Transfer of Rights of Recovery Against Others to Us or its equivalent.

[College/University] and its [Board of Regents/Trustees] are to be named as additional insured using ISO endorsement CG2011 Additional Insured – Managers or Lessors of Prem-ises or its equivalent.

Business Automobile Coverage


Required where a vehicle will be used on the premises.

Coverage must include all owned, leased, hired, non-owned, and employee non-owned vehicles and, where applicable, Personal Injury Protection.





Insurance Requirements: COMMERCIAL LEASE OF PREMISES




ISO Endorsement CG2010 or its equiva-lent – see notes


$2,000,000 general aggregate

$2,000,000 products/completed operations

$1,000,000 Damage to Premises Rented to You

$5,000 medical payments

Contracts for lease of [College/University] owned premises require tenants to provide commercial general liability. Agreements must include Waiver of Subrogation language in favor of [College/University], its [Board of Regents/Trustees], offi cers, employees, agents, or volunteers that clearly states that the insurer paying any claim arising by reason of any operations under the lease will not seek reimbursement from the [College/University]. This can be accomplished by the use of ISO endorsement CG2988 Waiver of Transfer of Rights of Recovery Against Others to Us or its equivalent.

The [College/University] and [Board of Regents/Trustees] are to be named as Additional Insured using ISO endorsement CG2010.

The specifi cations in this section should be used in commer-cial-type leases with tenants. Generally, this section applies to long-term leases of offi ce space or offi ce buildings, land leases, development agreements, and the like. This section does not apply to short-term leases or permits to use college or university premises (buildings, stadiums, etc.) for special events.

FIRE EXPOSURESDamage to rented premises coverage provides protection for negligent acts of the lessee which result in dam-age to the college or university property that is under the lessee’s control. The commercial general liability policy typically has a sublimit of liability for damage to rented premises of $50,000. In this section, [College/University] should require a minimum sublimit of $1,000,000, in view of infl ation. However, if the premises under the control of the lessee have a value substantially higher than the standard damage to rented premises sublimit, the required limits should be amended to equal the value of the premises under control of the lessee. This is particularly important if the lessee operates a business that presents a signifi cant risk of fi re, such as a restaurant.


Insurance Requirements: COMMERCIAL LEASE OF PREMISES (continued)



SUPPLEMENTAL INSURANCE COVERAGESThere are additional insurance coverages that may need to be required under certain circumstances and should be included in the insurance requirements when appropriate.

Examples of supplemental insurance coverages:Builders Risk Insurance –• For those situations involving a ground lease, where the lessee will construct a building or other tenant improvements.Property Insurance –• If the lessee is leasing an existing college or university facility where they are the sole occupant, this insurance will be required on the building and the lessee’s contents.Pollution Legal Liability –• If the lessee will be using or storing hazardous materials or regulated sub-stances, such as fuel, this insurance will be required.

NOTE: Tenants are responsible for their own personal property (contents and equipment). It is recommended the college or university amend the lease agreement terms and conditions to make it clear that the institution is not responsible for loss or damage to the tenant’s personal property.



Required where a vehicle will be used on the premises.

Coverage must include all owned, leased, hired, non-owned, and employee non-owned vehicles and, where applicable, Personal Injury Protection.




The contract should state that the tenant waives all rights against [College/University] and its [Board of Regents/Trust-ees], offi cers, employees, agents, and volunteers for recov-ery of damages to the extent these damages are covered by workers’ compensation and employers’ liability insur-ance. The endorsement to use for this coverage is NCCI #WC000313 Waiver of Our Right to Recover from Others.


Insurance Requirements: COMMERCIAL LEASE OF PREMISES (continued)



Commercial Property Value of tenant’s property

Property insurance should be written on a Covered 1. Cause of Loss-Special Form, replacement cost cover-age, including coverage for fl ood and earth move-ment.[College/University] 2. should be named as a loss payee on property coverage for tenant improvements and betterments.If property coverage on the building is required, 3. “the [College/University] shall be named as an ad-ditional insured-owner/loss payee.”

Recommended minimum limits:Coverage for lessee’s tenant improvements, fi xtures • – 100% replacement costCoverage on building (required if lessee is sole oc-• cupant) – 100% replacement costCoverage for loss of rents using ISO form CP 15 03 • 06 07 or equivalent – Amount equal to all minimum annual rent and other sums payable under the lease

Must contain Waiver of Subrogation language that clearly states the insurer paying any claim will not seek reimburse-ment from [College/University].

Pollution Liability Varies by occupancy If tenants’ occupancy creates a pollution exposure this coverage should be required, which can be accomplished by adding ISO endorsement CG2415 Limited Pollution Liability Extension or its equivalent to the CGL policy. A separate pol-lution legal liability policy is also acceptable.


Indemnity All contracts should contain language obligating the consultant, contractor, lessee, or vendor to indem-nify, defend, and hold harmless [College/University] from and against any and all claims, losses, etc., arising from injury to persons or damage to property as a result of an act or omission of the consultant, contractor, lessee, or vendor. Hold harmless clauses come in many forms, categorized as broad, interme-diate, or limited form. In addition to [College/University’s] preference regarding the type of hold harmless agreement used, each state has diff erent laws and/or legal decisions that will govern which indemnifi -cation agreement is enforceable. Check with your risk management department before implementing changes to existing contract language. An explanation and example of each type of hold harmless clause is provided below.

Hold Harmless and Indemnifi cation Agreements and Non-Waivera. Hold Harmless and Indemnifi cation AgreementBroad FormTh e indemnitor assumes an unqualifi ed obligation to hold [College/University] harmless for all li-ability associated with the subject matter of the agreement, regardless of which party was actually at fault (even if the damage, injury, or claim is due to the sole negligence of [College/University]).

Example – Tenant will indemnify and hold [College/University] harmless from all claims arising from or in connection with (i) the conduct or management of the Premises or of any business therein, or any work or thing whatsoever done, or any condition created in or about the Premises during the Term; (ii) any act, omission, or negligence of Tenant or any of Tenant’s subtenants or licensees or the partners, directors, offi cers, agents, employees, invitees, or contractors of Tenant or of Tenant’s sub-tenants or licensees; (iii) any accident, injury, or damage whatsoever occurring in or at the Premises. Tenant hereby expressly indemnifi es [College/University] for the consequences of any negligent act or omission of [College/University] and its [Board of Regents/Trustees], offi cers, employees, agents, and volunteers, unless such act or omission constitutes gross negligence or intentional misconduct.

Intermediate FormTh e indemnitor assumes all liabilities of [College/University] relating to the subject matter of the agreement, except where the injury or damage is caused by [College/University’s] sole negligence. Any amount of fault on the part of the indemnitor under an intermediate hold harmless agreement ob-ligates the indemnitor to indemnify [College/University] for the total amount of damages. Th e only instance in which the indemnitor is relieved of the contractual obligation to indemnify is when the loss is due solely to the fault of [College/University].

Example – To the fullest extent permitted by law, the Contractor shall indemnify and hold harmless [College/University] and its [Board of Regents/Trustees], offi cers, employees, agents, and volunteers from and against all claims, damages, losses, and expenses, including but not limited to attorneys’ fees, arising out of or resulting from the performance of the Work, provided that any such claim,

Contract Language


damage, loss, or expense (i) is attributable to bodily injury, sickness, disease, or death, or to injury to or destruction of tangible property (other than the Work itself ), including the loss of use resulting therefrom and (ii) is caused in whole or in part by any negligent act or omission of the Contractor, any Subcontractor, anyone directly or indirectly employed by any of them, or anyone for whose acts any of them may be liable, regardless of whether or not it is caused in part by a party indemnifi ed hereunder.

Limited FormTh is agreement obligates the indemnitor only to the extent of its own fault. Th is type is often re-ferred to as a comparative fault indemnifi cation agreement.

Example – To the fullest extent permitted by law, Indemnitor shall indemnify and hold harmless [College/University] from and against claims, damages, losses, and expenses, including but not lim-ited to attorneys’ fees, arising out of or resulting from performance of the work, provided that such claim, damage, loss, or expense is attributable to bodily injury, sickness, disease, or death, or to injury to or destruction of tangible property (other than the work itself ), including loss of use resulting therefrom, but only to the extent caused in whole or in part by negligent acts or omissions of Indem-nitor.

b. Non-WaiverTh e parties hereto understand and agree that [College/University] is relying on, and does not waive or intend to waive by any provision of this Contract, any monetary limitations or any other rights, immunities, and protections provided by the state of [your state], as from time to time amended, or otherwise available to [College/University] or its offi cers, employees, agents, or volunteers.

Independent ContractorAll consulting contracts should contain language that the consultant is an independent contractor with respect to the services to be performed under the contract and is not an employee of [College/University].An example is shown below:

AssignmentAll consulting contracts should expressly prohibit the consultant from subletting or assigning any ser-vices covered by the contract without written permission of [College/University]. Th is provision does not extend to ancillary services, such as printing or photocopying, that are reimbursable under the contract.

Contractor and any persons employed by Contractor for the performance of work hereunder shall be independent contractors and not agents of [College/University]. Any provisions in this Contract that may appear to give [College/University] the right to direct Contractor as to details of doing work or to exercise a measure of control over the work mean that Contractor shall follow the direction of [College/University] as to end results of the work only.

As an independent contractor, Contractor is not entitled to Workers’ Compensation benefi ts except as may be provided by the Contractor, nor to unemployment insurance benefi ts unless unemployment compensation coverage is provided by the Contractor or some other entity. Th e Contractor is obligated to pay all federal and state income tax on any moneys earned or paid pursuant to this contract.


APPENDIX SUBJECT

1 Construction / Renovation Contracts / Builders Risk / Installation Floater Options

2 Vendor Agreements

3 Consulting and Professional Services

4 Short-Term Lease Agreements, Special Events, and Commercial Lease of Premises

5 Schedule of Additional Insured Endorsements

6 Defi nitions of Common Terms

7 Example Request Letters

Appendices


Appendix 1: Construction / Renovation Contracts / Builders Risk / Installation Floater Options

Insurance and Related RequirementsMinimum Insurance Coverages and Requirements[Contractor] shall obtain and maintain the minimum insurance coverages set forth below. By requiring such minimum insurance, [College/University] shall not be deemed or construed to have assessed the risk that may be applicable to [Contractor] under Contract Number ____________. [Contractor] shall assess its own risks and, if it deems appropriate and/or prudent, maintain higher limits and/or broader coverages. Th e Contractor is not relieved of any liability or other obligations assumed or pursuant to the Contract by reason of its failure to obtain or maintain insurance in suffi cient amounts, duration, or types. Th e insurance coverages stated below do not replace any surety bonds as required by contract.

CoveragesCommercial General Liability1. – ISO form CG0001 or its equivalent form providing equivalent liability coverage. Coverage to include:

Premises and Operations• Personal Injury/Advertising Injury• Products/Completed Operations• Liability assumed under an Insured Contract (including tort liability of another assumed in • a business contract)Independent Contractors•

Automobile Liability 2. – Coverage to include:Owned Vehicles• Leased Vehicles• Hired Vehicles• Non-Owned and Employee Non-Owned Vehicles• Personal Injury Protection (where applicable)•

Workers’ Compensation and Employers’ Liability 3. – Workers’ Compensation (Coverage A) and Employers’ Liability (Coverage B)Professional Liability (including Design Build Errors and Omissions) 4. – When operations or activities under the contract involve any type of design work, professional liability coverage shall be maintained by [Contractor] covering wrongful acts, errors or omissions of [Contractor].Contractors’ Pollution Liability 5. – [College and University] requires this coverage whenever work at issue under this Contract involves potential pollution risk to the environment or losses caused by pollution conditions, including asbestos, that may arise from the operations of the Contrac-tor described in the Contractor’s scope of services. Policy shall cover the Contractor’s completed operations.

Coverage shall apply to sudden and gradual pollution conditions resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids, or gases, natural gas, waste materials, or other irritants, contaminants, or pollutants, including asbestos. If the coverage is


written on a claims-made basis, the Contractor warrants that any retroactive date applicable to coverage under the policy precedes the eff ective date of this Contract and that continuous cover-age will be maintained or an extended discovery period will be exercised for a period of three (3) years beginning from the time that work under this contract is completed.

Th is coverage can be obtained through the Contractor’s commercial general liability policy by in-cluding the Limited Pollution Liability Extension ISO endorsement CG 2415 or its equivalent.

If the contractor is responsible for the transport of any hazardous waste, the Contractor can extend the Pollution Liability Policy to cover this exposure or the Contractor can add to the Business Automobile Policy by adding ISO endorsement CA 9948 and MCS-90.

Limits Required[Contractor] shall carry the following limits of liability:

* Designated Construction Project(s) General Aggregate (ISO Form CG2503)

Commercial General LiabilityGeneral Aggregate (Per Project Aggregate)* $2,000,000

Products/Completed Operations Aggregate $2,000,000Each Occurrence Limit $1,000,000Personal/Advertising Injury $1,000,000Damage to Rented Premises $50,000Medical Payments (Any One Person) $5,000

Automobile LiabilityBodily Injury/Property Damage (Each Accident) $1,000,000Personal Injury Protection, if applicable Statutory

Workers’ CompensationCoverage A (Workers’ Compensation) StatutoryCoverage B (Employers’ Liability) $500,000

$500,000$500,000

Umbrella Liability (if required)Each Occurrence Limit $1,000,000

General Aggregate Limit $1,000,000Products/Completed Operations Aggregate Limit $1,000,000

Professional Liability (if required)Each Occurrence/Incident/Claim $1,000,000Aggregate $2,000,000

[College/University] requires [Contractor] to keep this policy in eff ect after completion of the project as speci-fi ed in the contract.

Pollution Liability (if required)Per Loss $1,000,000Aggregate $1,000,000

[College/University] requires [Contractor] to keep this policy in eff ect after completion of the project as speci-fi ed in the contract.


Additional RequirementsCommercial General Liability (CGL)Commercial general liability (CGL) must include coverage for liability arising from products-com-pleted operations and liability assumed under an insured contract.

If the CGL insurance has a general aggregate limit, then ISO endorsement CG2503 (03/97 Edition) or its equivalent must be added. Th e Designated Construction Project(s) General Aggregate Limit must be maintained for the duration of the agreement and the limit must be twice the minimum required occurrence limit.

[Contractor] shall name [College/University] and its [Board of Regents/Trustees], offi cers, employees, agents, and volunteers as Additional Insureds on ISO endorsement CG2010 or a substitute provid-ing equivalent coverage and CG2037.

Th e CGL policy shall contain no endorsement or modifi cation limiting the scope of coverage for li-ability arising from pollution, explosion, collapse, underground property damage, or damage to the work.

Business AutomobileBusiness Automobile must be endorsed to include contractual liability coverage if it is not automati-cally included within the form.

Contractors’ Pollution LiabilityTh e Contractors’ Pollution Policy shall be endorsed to include the following as additional insureds: Th e college or university and its Board of Regents/Trustees, offi cers, employees, agents, and volun-teers named as an additional insured with respect to liability and defense of suits arising out of the activities performed by, or on behalf of, the Contractor, including completed operations.

Workers’ CompensationWorkers’ compensation policy must include NCCI endorsement WC000313 Waiver of Our Right to Recover from Others endorsement in favor of [College/University] and its [Board of Regents/Trust-ees], offi cers, employees, agents, and volunteers.

If there is an exposure of injury to the contractor’s employees under the U.S. Longshore and Har-bor Workers’ Compensation Act, the Jones Act, or under laws, regulations, or statutes applicable to maritime employees, coverage shall be included for such injuries or claims. Th e U.S. Longshore and Harbor Workers’ Compensation Act coverage is provided by NCCI endorsement WC000106A, and the Maritime Coverages are provided by NCCO endorsement WC000201A.

All PoliciesMust be written on a primary basis, non-contributory with any other insurance coverages and/• or self-insurance carried by [College/University].Must include a Waiver of Subrogation Clause.• May not be non-renewed, cancelled, or materially changed or altered unless thirty (30) days • advance written notice via certifi ed mail is provided to [College/University].


Option I: Builders Risk or Installation Floater Provided by Contractor – Completed Value BasisUnless otherwise provided, the Contractor shall purchase and maintain, in a company or companies law-fully authorized to do business in the jurisdiction in which the project is located, builders risk insurance in the amount of the initial contract amount plus values of subsequent modifi cations, change orders, and loss of materials supplied or installed by others comprising the value of the entire project at the site on a replacement cost basis without optional deductibles. Such builders risk insurance shall be maintained, unless otherwise provided in the contract documents or otherwise agreed in writing by all persons and entities who are benefi ciaries of such insurance, until fi nal payment has been made or until no person or entity other than [College/University] has insurable interest in the property to be covered, whichever is earlier. Th e builders risk insurance shall include interests of [College/University], the general contractor, subcontractors, and sub-tier contractors in the project.

Th e builders risk coverage shall be written on a Special Covered Cause of Loss form and shall include theft; vandalism; malicious mischief; collapse; false-work; temporary buildings; transit; debris removal, including demolition; increased cost of construction; architect fees and expenses; soft costs (see page 42); fl ood, including water damage; earthquake; and, if applicable, all below and above ground structures; piping; foundations, including underground water and sewer mains; piling, including the ground on which the structure rests; and excavation, backfi lling, fi lling, and grading.

Insured property shall include portions of the work located away from the site but intended for use at the site and shall also cover portions of the work in transit. Th e policy shall cover the cost of removing debris, including demolition as may be made legally necessary by the operation of any law, ordinance, or regulation.

Th e builders risk insurance shall include a Benefi cial Occupancy Clause. Th e policy shall specifi cally permit occupancy of the building during construction. Th e Contractor shall take reasonable steps to obtain consent of the insurance company and delete any provisions with regard to restrictions within any occupancy clauses within the builders risk policy. Th e builders risk policy shall remain in force until acceptance of the project by the [College or University].

Equipment breakdown coverage (boiler and machinery) shall be included as required by the contract documents or by law, which shall specifi cally cover insured equipment during installation and testing, including cold and hot testing.

Th e deductible shall not exceed TBD (may be higher for fl ood and earthquake) and shall be the respon-sibility of the contractor. NOTE: Add this clause to the Option II—“Except for losses that involve all Acts of God such as fl ood, earthquake, windstorm, tsunami, volcano, etc.”

Th e [College/University’s] insurance coverage shall be primary insurance and non-contributory with re-spect to all other available sources.


If Owner is damaged by failure of Contractor to maintain insurance as required in this section, then Contractor shall bear all reasonable costs properly attributable to that failure. Coverages shall be writ-ten for 100% of the completed value (replacement cost basis) of the work being performed. Waiver of Subrogation is to apply against all parties named as insureds, but only to the extent the loss is covered. Other coverages may be required if provided in the contract documents.

If the Contractor does not intend to purchase such builders risk insurance required by the contract and with all of the coverages in the amount described above, the Contractor shall so inform [College/University] as stated in writing prior to commencement of the work. [College/University] may then eff ect insurance which will protect the interests of [College/University], the general contractor, subcontractors, and sub-tier contractors in the project. Coverages applying shall be the same as stated above including other coverages that may be required by [College/University]. Th e cost shall be charged to the Contractor. Coverage shall be written for 100% of the completed value of the work being performed, with a deduct-ible not to exceed TBD per occurrence. Higher deductibles may be used depending on size of contract. Losses in excess of the deductible insured under the builders risk shall be adjusted in conjunction with [College/University]. Any insurance payments/proceeds shall be made payable to [College/University], subject to requirements of any applicable mortgage clause. Th e Contractor shall pay subcontractors their just shares of insurance proceeds received by the contractor, and by appropriate agreements, written where legally required for validity, shall require subcontractors to make payments to their sub-tier con-tractors in similar manner.

If [College/University] is damaged by the failure or neglect of the Contractor to purchase or maintain insurance as described above, without so notifying [College/University], then the Contractor shall bear all reasonable costs properly attributable thereto.

Contractors engaged in modifi cations of existing structures are required to secure a Benefi cial Occu-pancy Endorsement, which enables [College/University] to occupy the facility during construction.

OPTIONAL CLAUSE:[College/University] shall purchase and maintain equipment breakdown coverage (boiler and machinery) required by the contract documents or by law, which shall specifi cally cover insured equipment during installation and testing (not hot tests) and until fi nal ac-ceptance by [College/University]; this insurance shall include interests of [College/Univer-sity], general contractor, subcontractors, and sub-tier contractors in the work; all shall be named as additional insureds.

OPTIONAL CLAUSE:If during the project construction period, [College/University] insures properties, real or personal or both, adjoining or adjacent to the site by property insurance under policies separate from those insuring the project, or if after fi nal payment, property insurance is to be provided on the completed project through a policy or policies other than those insur-ing the project during the construction period, [College/University] shall waive all rights for damages caused by fi re or other perils covered by this separate property insurance.


Option II: Builders Risk Provided by [College/University]NOTE: Many institutions purchase the builders risk coverage since the premiums would otherwise be a pass-through from the contractor to the institution without any incentive for the contractor to seek out the best deal.

Unless otherwise provided, the Contractor shall purchase and maintain, in a company or companies law-fully authorized to do business in the jurisdiction in which the project is located, builders risk insurance in the amount of the initial contract amount plus values of subsequent modifi cations, change orders, and loss of materials supplied or installed by others comprising the value of the entire project at the site on a replacement cost basis without optional deductibles. Such builders risk insurance shall be maintained, unless otherwise provided in the contract documents or otherwise agreed in writing by all persons and entities who are benefi ciaries of such insurance, until fi nal payment has been made or until no person or entity other than [College/University] has insurable interest in the property to be covered, whichever is earlier. Th e builders risk insurance shall include interests of [College/University], the general contractor, subcontractors, and sub-tier contractors in the project.

Th e builders risk coverage shall be written on a Special Covered Cause of Loss form and shall include theft; vandalism; malicious mischief; collapse; false-work; temporary buildings; transit; debris removal, including demolition; increased cost of construction; architect fees and expenses; soft costs (see page 42); fl ood, including water damage; earthquake; and, if applicable, all below and above ground structures; piping; foundations, including underground water and sewer mains; piling, including the ground on which the structure rests; and excavation, backfi lling, fi lling, and grading.

Th e builders risk shall include a Benefi cial Occupancy Clause. Th e policy shall specifi cally permit occu-pancy of the building during construction. Th e Contractor shall take reasonable steps to obtain consent of the insurance company and delete any provisions with regard to restrictions within any occupancy clauses within the builders risk policy. Th e builders risk policy shall remain in force until acceptance of the project by the [College/University].

Equipment Breakdown Coverage (boiler and machinery) shall be included as required by the contract documents or by law, which shall specifi cally cover insured equipment during installation and testing, including cold and hot testing.

Th e deductible shall not exceed TBD (may be higher for fl ood and earthquake) and shall be the respon-sibility of the Contractor. NOTE: Add this clause to the Option II—“Except for losses that involve all Acts of God, such as fl ood, earthquake, windstorm, tsunami, volcano, etc.”

Th e [College/University’s] insurance coverage shall be primary insurance and non-contributory with re-spect to all other available sources.

If [College/University] does not intend to purchase such builders risk insurance required by the contract and with all of the coverages in the amount described above, [College/University] shall so inform the Contractor in writing prior to commencement of the work. Th e Contractor may then eff ect insurance which will protect the interests of [College/University], the Contractor, subcontractors, and sub-tier con-tractors in the project. Coverages applying shall be the same as stated above including other coverages


that may be required by [College/University]. Th e cost shall be charged to [College/University]. Coverage shall be written for 100% of the completed value (replacement cost basis) of the work being performed, with a deductible not to exceed $25,000 per occurrence (may be higher for fl ood and earthquake). High-er deductibles may be used depending on size of contract. (Contact risk management for determination or approval of higher deductibles).

Losses in excess of the deductible insured under the builders risk shall be adjusted by the [College/Uni-versity]. Any insurance payments/proceeds shall be made payable to [College/University] subject to re-quirements of any applicable mortgage clause. Th e Contractor shall pay subcontractors their just shares of insurance proceeds received by the contractor, and by appropriate agreements, written where legally required for validity, shall require subcontractors to make payments to their sub-tier contractors in simi-lar manner.

If during the project construction period [College/University] insures properties, real or personal or both, adjoining or adjacent to the site by property insurance under policies separate from those insuring the project, or if after fi nal payment, property insurance is to be provided on the completed project through a policy or policies other than those insuring the project during the construction period, [College/Uni-versity] shall waive all rights for damages caused by fi re or other perils covered by this separate property insurance.


Builders Risk Soft Costs

Th e term “soft costs” describes a type of coverage found in a builders risk policy. Soft cost coverage is generally referred to as “delay in opening coverage.” Delay in opening coverage reimburses the [College/University] for a loss resulting from a delay in the project’s completion, when the delay is a direct con-sequence of damage to the project by an insured peril.

Th ere are two basic types of delay in opening coverage: 1) loss of earnings-type coverage (income that would have been received had there been no delay in completion); and 2) specifi c delay cost-type cover-age. Th e following list provides a brief description of some delay in completion coverage examples.

Normally, most institution projects do not require soft cost coverage. Th e college or university should be aware of the possible exposure to the institution and discuss this with the contractor to determine if any of the following examples apply to the project.

Loss of Earnings. • Total revenue and other earnings derived from operations of the project less: (1) cost of materials and supplies consumed directly in manufacturing the product or supplying the services sold by the insured; (2) services purchased from outsiders for resale which do not continue under contract; (3) charges and expenses which do not necessarily continue during the delay.Loss of Rents. • Th e actual loss of net rental income sustained as a direct result of delay but not exceeding the reduction in rentals less charges and expenses which do not necessarily continue or arise because of said delay.General Overhead-Developer. • General overhead and administration expenses incurred, including, but not limited to, additional clerical personnel, consultants’ fees, temporary offi ce space, additional security, and similar expenses.Miscellaneous Operating Expenses. • Miscellaneous operating expenses may include such items as general overhead and administrative expenses, advertising, taxes, and other similar expenses incurred as a result of the delay in completion.Fixed Operational and Maintenance Expenses. • Th ose costs incurred by the project owner whether or not the project is operating, less any income derived from the project operations. Such items include salaries, wages, taxes, maintenance, and other ongoing expenses which can-not be reasonably avoided during such delay.Wheeling Charges. • Th ose fi xed cost payments due to another electric utility for availability to wheel power through that utility’s transmission system which are due whether or not power is being generated by the project.Additional Interest Expense. • Th e additional interest that may be charged by lenders for the extension or renewal of interim fi nancing necessary for the completion of the project.Debt Service Payments. • Interest payments and/or principal payments which become due and must be paid whether the project is operational or not.Bond Interest. • Bond interest payments which become due and must be paid whether the proj-ect is habitable or not.Construction Loan Fees. • Additional commissions or loan fees incurred in rearranging fi nanc-ing necessary for completion of the project.


Refi nancing Charges. • Th e additional costs expended by the insured solely to obtain new fi nancing for the project, should the fi nancing expire or fail to be renewed.Fees for Letters of Credit, Trustee, Remarketing of Bonds. • Additional costs incurred in the event it becomes necessary to refi nance the project as a result of the delay in completion.Real Estate Taxes. • Additional realty taxes and other assessments actually incurred for the pe-riod of time that construction has been extended beyond the scheduled completion date.Marketing Expenses. • Additional advertising, promotion, and such additional expenses as are incurred as a result of delay in scheduled completion of the project.Legal/Professional Fees. • Additional accounting work incurred in renewing or restructuring the fi nancing, other professional fees as a result of additional costs and expenses of the project, and additional legal work incurred in renegotiating and preparing revised contracts and other documents.Leasing Expenses. • Additional costs of renegotiating and preleasing of the project as a result of a delay in the scheduled opening date.

NOTE: Generally speaking, soft cost coverage is necessary only on very large projects. However, the sample insurance specifi cations that follow include a requirement for soft cost coverage under the builders risk insurance requirement. Staff may determine that soft cost coverage is not necessary on a specifi c project and can delete the requirement when developing the contract.

Builders Risk Soft Costs (continued)


Installation Floater Insurance Coverage(No Actual Building Alterations—Walls, etc.)Th is coverage diff ers from builders risk as it is designed to cover materials and/or equipment to be in-stalled in existing structures and/or infrastructure (i.e., roads, bridges, culverts, underground tunnels, machinery, equipment, etc.). Coverage is to be written on a Special Covered Cause of Loss Form and is to include theft, faulty workmanship, mechanical or electrical damage during testing and labor costs to repair damaged work, and soft costs (expediting expenses). Deletion of any coinsurance provision is also required; any exclusions for underground exposures to be deleted. Flood and earthquake coverages are also to be provided. As with builders risk insurance coverage, either the Contractor or the Institution shall be responsible for this coverage. Coverage shall end when the work is accepted by [College/Univer-sity].


Appendix 2: Vendor Agreements

Insurance and Related RequirementsMinimum Insurance Coverages and RequirementsTh e [Vendor] shall obtain and maintain the minimum insurance coverages set forth below. By requiring such minimum insurance, [College/University] shall not be deemed or construed to have assessed the risk that may be applicable to the [Vendor] under Permit Number ____________. Th e [Vendor] shall assess its own risks and, if it deems appropriate and/or prudent, maintain higher limits and/or broader cover-ages. Th e [Vendor] is not relieved of any liability or other obligations assumed or pursuant to the contract by reason of its failure to obtain or maintain insurance in suffi cient amounts, duration, or types.

CoveragesCommercial General Liability1. – ISO form CG0001 or its equivalent. Coverage to include:



Workers’ Compensation and Employers’ Liability 3. – Workers’ Compensation (Coverage A) and Employers’ Liability (Coverage B)Liquor Liability 4. – If the vendor is operating a business that distributes, sells, or serves alcoholic beverages or if their activities require a liquor license, they must maintain liquor liability insur-ance that includes [College/University] and its [Board of Regents/Trustees], offi cers, employees, agents, and volunteers as additional insureds.


Limits RequiredTh e [Vendor] shall carry the following limits of liability as required below:

Additional RequirementsCommercial General Liability (CGL)Commercial General Liability (CGL) must include coverage for liability arising from products-completed operations and liability assumed under an insured contract.

If the CGL insurance has a general aggregate limit, then ISO endorsement CG2504 (03/97 Edition) or its equivalent must be added. Th e Designated Location(s) General Aggregate Limit must be maintained for the duration of the agreement, and the limit must be twice the minimum required occurrence limit.

[Vendor] shall name [College/University] and its [Board of Regents/Trustees], offi cers, employees, agents, and volunteers as Additional Insureds on ISO endorsement CG 2026 or its equivalent.

Th e CGL policy shall contain no endorsement or modifi cation limiting the scope of coverage for liability as-sumed under a contract or liability arising from pollution.

All PoliciesMust be written on a primary basis, non-contributory with any other insurance coverages and/or self-• insurance carried by [College/University].Must include a Waiver of Subrogation Clause.• May not be non-renewed, cancelled, or materially changed or altered unless thirty (30) days advance writ-• ten notice via certifi ed mail is provided to [College/University].

Commercial General LiabilityGeneral Aggregate $2,000,000

Products/Completed Operations Aggregate $2,000,000Each Occurrence Limit $1,000,000Personal/Advertising Injury $1,000,000Damage to Rented Premises $50,000Medical Payments (Any One Person) $5,000

Liquor Liability (if applicable)Each Occurrence $1,000,000Aggregate $1,000,000



$500,000$500,000


Appendix 3a: Consulting and Professional Services,Architects/Engineers

Insurance and Related RequirementsMinimum Insurance Coverages and RequirementsArchitect/Engineer (Consultant) and sub-consultants shall procure and maintain until all of their obli-gations have been discharged, including any warranty periods under this contract are satisfi ed, insurance against claims for injury to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the Consultant, his agents, representatives, employees, or sub-consultants.

Th e insurance requirements herein are minimum requirements for this contract and in no way limit the indemnity covenants contained in this contract.

Th e [College/University] in no way warrants that the minimum limits contained herein are suffi cient to protect the Consultant from liabilities that might arise out of the performance of the work under this contract by the Consultant, his agents, representatives, employees, or sub-consultants. Th e Consultant shall assess its own risks and, if it deems appropriate and/or prudent, maintain higher limits and/or broader coverages. Th e Consultant is not relieved of any liability or other obligations assumed or pursu-ant to the contract by reason of its failure to obtain or maintain insurance in suffi cient amounts, dura-tion, or types.




Workers’ Compensation and Employers’ Liability 3. – Workers’ Compensation (Coverage A) and Employers’ Liability (Coverage B)


Professional Liability – (Errors and Omissions) for Prime Consultants and Design/Build 4. Liability – Th e [Consultant] shall maintain errors and omissions liability covering wrongful acts, errors, and/or omissions, including design errors of [Architect] for damage sustained by reason of or in the course of operations under this contract. Th e policy/coverages shall be amended to include the following:

Description of operations on the declaration describing the scope of your professional ser-• vices shall include all aspects of the services performed under this contract, including events arising out of your operations or any qualifi ed subcontractors and sub-tier contractorsAmendment of any contractual liability exclusion to state: “Th is exclusion does not apply to • any liability of others, which you assume under a written contract provided such liability is caused by your wrongful acts.”Coverage for claims alleging improper supervision of subcontractors and sub-tier contrac-• torsRepresentative insured wording amended to include past principals/employees• Deletion of any exclusions pertaining to design/build liability• Coverage shall apply for three (3) years after project is complete• Defi nition of “damages” amended to include punitive damages, if permitted by law•

Professional liability may be required on any registered sub-consultant participating in a [Col-lege/University] design project. A registered sub-consultant, as appropriate for the specifi c proj-ect, may include structural, civil, mechanical, plumbing, electrical engineering, landscape, archi-tecture, survey, geo-technical, and materials testing.

Limits RequiredTh e [Architect] shall carry the following limits of liability as required below:


Products/Completed Operations Aggregate $2,000,000Each Occurrence Limit $1,000,000

Personal/Advertising Injury $1,000,000Damage to Rented Premises $50,000Medical Payments (Any One Person) $5,000

Automobile LiabilityBodily Injury/Property Damage (Each Accident) $1,000,000Personal Injury Protection Statutory


$500,000$500,000

Umbrella LiabilityEach Occurrence Limit $1,000,000General Aggregate Limit $1,000,000Products/Completed Operations Aggregate $1,000,000


Professional Liability (Errors and Omissions Liability) for Primary Consultants and Design/Build LiabilityEstimated Projection Construction Cost up to $9,999,999

Each Claim $2,000,000Annual Aggregate $2,000,000

Estimated Projection Construction Cost from $10,000,000 to $19,999,999Each Claim $3,000,000Annual Aggregate $3,000,000

Estimated Projection Construction Cost from $20,000,000 to $40,000,000


Estimated Projection Construction Cost over $40,000,000Each Claim $10,000,000Annual Aggregate $10,000,000

In the event that any professional liability insurance required by this contract is written on a claims-made basis, Consultant warrants that any retroactive date under the policy shall precede the eff ective date of this contract and that either continuous coverage will be maintained or an extended discovery period will be exer-cised for a period of three (3) years beginning at the time work under this contract is completed.

Policy shall contain a waiver of subrogation in favor of the [College/University] and its Board of Regents/Trustees, offi cers, employees, agents, and volunteers.

Professional Liability (Errors and Omissions Liability) for Sub-Consultants (Projects with an estimated construction cost of $5 million or greater)In addition to the insurance requirements for the Consultant, the consultant’s registered sub-consultants (including structural, civil, mechanical, plumbing, electrical engineering, landscape architecture, survey, geo-technical and materials testing) are required to carry Professional Liability insurance as follows: Major Sub-Consultants (structural, civil, mechanical, plumbing, electrical engineers)



Estimated Projection Construction Cost over $40,000,000Each Claim $3,000,000Annual Aggregate $3,000,000

All other registered consultants not listed above will carry:


In the event that any professional liability insurance required by this contract is written on a claims-made basis, Consultant warrants that any retroactive date under the policy shall precede the eff ective date of this contract and that either continuous coverage will be maintained or an extended discovery period will be exer-cised for a period of three (3) years beginning at the time work under this contract is completed.

Policy shall contain a waiver of subrogation in favor of the [College/University] and its Board of Regents/Trustees, offi cers, employees, agents, and volunteers.


Additional RequirementsCommercial General Liability (CGL)If the commercial general liability (CGL) insurance has a general aggregate limit, the general aggregate limit must be maintained for the duration of the agreement.

All PoliciesMust be written on a primary basis, non-contributory with any other insurance coverages and/or self-• insurance carried by [College/University].Must include a Waiver of Subrogation Clause.• May not be non-renewed, cancelled or materially changed or altered unless thirty (30) days advance writ-• ten notice via certifi ed mail is provided to [College/University].


Appendix 3b: Consulting and Professional Services,Information Technology

Contracts for information technology (IT) products and services, such as system integration, program-ming, and data management, create specialized exposures from loss or loss of use of [College/University’s] tangible property and intangible property, including software, data, or other electronically stored infor-mation).

Th e fast pace of technology advances coupled with a highly competitive marketplace can lead to situa-tions where IT vendors over-promise or misrepresent what their services or product solutions are able to deliver. Additionally, the nature of the agreements give vendors unique access to [College/University’s] IT resources and data, which could result in security issues if systems or data were misused, damaged, or compromised.

Th e types of losses that can occur under such circumstances are often excluded under general liability policies. However, they can be covered through separate professional liability insurance policies, also known as errors and omissions (E&O) liability insurance.

Insurers have developed specialized E&O policies that provide IT professionals coverage for the com-mon forms of IT liability risks, including “malpractice” claims in which the company or individual are alleged to have been negligent in following professional standards and breach of contract claims alleging failure to provide services in accordance with specifi cations.

Examples of services that would require professional liability coverage include, but are not limited to: Software development• Computer consulting• Website design/programming• Multimedia designers• Integrated computer system design• Data management• Other computer service providers•

Additionally, agreements which allow vendors privileged access to network systems, valuable property, or sensitive data can also expose [College/University] to signifi cant security, theft, or fraud risks and should include additional provisions for crime or fi delity coverage including computer crime or fraud. If the Contractor is physically working on [College/University’s] premises, the Contractor’s crime coverage should include third-party fi delity coverage.


Sample Insurance Specifi cations and Indemnifi cation ClauseProfessional Contracts—Information TechnologyIndemnifi cation ClauseContractor shall indemnify, hold harmless, and, not excluding [College/University’s] right to participate, defend [College/University], its offi cers, trustees, offi cials, agents, and employees (hereinafter referred to as “Indemnitee”) from and against all liabilities, claims, actions, damages, losses, and expenses (hereinaf-ter referred to collectively as “claims”), including without limitation reasonable attorneys’ fees and costs, bodily injury or personal injury including death, or loss or damage to tangible or intangible property caused, or alleged to be caused, in whole or in part, by the negligent or willful acts or omissions of Con-tractor or any of its owners, offi cers, directors, agents, employees, or subcontractors. Th is indemnity includes any claim or amount arising out of or recovered under the workers’ compensation law or aris-ing out of the failure of such contractor to conform to any federal, state, or local law, statute, ordinance, rule, regulation, or court decree. It is the specifi c intention of the parties that the Indemnitee shall, in all instances, except for claims arising solely from the negligent or willful acts or omissions of the Indemni-tee, be indemnifi ed by Contractor from and against any and all claims. It is agreed that Contractor will be responsible for primary loss investigation, defense, and judgment costs where this indemnifi cation is applicable. In consideration of the award of this contract, the Contractor agrees to waive all rights of subrogation against [College/University], its offi cers, trustees, offi cials, agents, and employees for losses arising from the work performed by the Contractor for [College/University].

Insurance RequirementsContractor and subcontractors shall procure and maintain until all of their obligations have been dis-charged, including any warranty periods under this contract are satisfi ed, insurance against claims for injury to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the Contractor, his agents, representatives, employees, or subcontractors.

Th e insurance requirements herein are minimum requirements for this contract and in no way limit the indemnity covenants contained in this contract. [College/University] in no way warrants that the mini-mum limits contained herein are suffi cient to protect the Contractor from liabilities that might arise out of the performance of the work under this contract by the Contractor, his agents, representatives, em-ployees, or subcontractors, and Contractor is free to purchase additional insurance as may be determined necessary.


A. Minimum Scope and Limits of Insurance: Contractor shall provide coverage with limits of liability not less than those stated below. An excess liability policy or umbrella liability policy may be used to meet the minimum liability requirements provided that the coverage is written on a “following form” basis.

Commercial General Liability – Occurrence Form: 1. Policy shall include bodily injury, property damage, and liability assumed under an insured contract, including defense costs.

Th e policy shall be endorsed to include the following additional insured language: “• [College/University], its affi liated organizations, successors, or assignees, its offi cials, trustees, employ-ees, agents, and volunteers shall be named as additional insureds with respect to liability arising out of the activities performed by, or on behalf of, the Contractor.” Minimum Limits:•

General Aggregate $1,000,000Products/Completed Operations Aggregate $1,000,000Each Occurrence Limit $1,000,000Personal/Advertising Injury $1,000,000

Automobile Liability (can be waived if contract does not involve use of motor vehicles): 2. Bodily injury and property damage for any owned, hired, and non-owned vehicles used in the performance of this contract.

Minimum Limits:• Bodily Injury/Property Damage (Each Accident) $1,000,000

Workers’ Compensation and Employers’ Liability3. Minimum Limits:•

Coverage A (Workers’ Compensation) StatutoryCoverage B (Employers’ Liability) $500,000

$500,000$500,000

Professional Liability (Errors and Omissions Liability), including Cyber Liability: 4. Th e poli-cy shall cover professional misconduct or lack of ordinary skill for those positions defi ned in the scope of services of this contract.

In the event that the professional liability insurance required by this contract is written on a claims-made basis, Contractor warrants that any retroactive date under the policy shall precede the eff ective date of this contract and that either continuous coverage will be maintained or an extended discovery period will be exercised for a period of two (2) years beginning at the time work under this contract is completed.

If such insurance is maintained on an occurrence form basis, Contractor shall maintain such insurance for an additional period of one (1) year following termination of contract. If such in-surance is maintained on a claims-made basis, Contractor shall maintain such insurance for an additional period of three (3) years following termination of the contract.

If Contractor contends that any of the insurance it maintains pursuant to other sections of this clause satisfi es this requirement (or otherwise insures the risks described in this section), then Contractor shall provide proof of same.


Th e insurance shall provide coverage for the following risks:Liability arising from theft, dissemination, and/or use of confi dential information (a defi ned • term including, but not limited to, bank account information; credit card account informa-tion; and personal information, such as name, address, and social security numbers) stored or transmitted in electronic formNetwork security liability arising from the unauthorized access to, use of, or tampering with • computer systems, including hacker attacks or inability of an authorized third party to gain access to your services, including denial of service, unless caused by a mechanical or electrical failureLiability arising from the introduction of a computer virus into, or otherwise causing damage • to, a customer’s or third person’s computer, computer system, network, or similar computer-related property and the data, software, and programs thereon

Additional Requirements:Th e policy shall provide a waiver of subrogation.• Th e policy shall be endorsed to include additional insured language such as: “• [College/Uni-versity], its affi liated organizations, successors, or assignees, its offi cials, trustees, employees, agents, and volunteers shall be named as additional insureds with respect to liability arising out of the activities performed by, or on behalf of the Contractor.”

Minimum Limits for Service Contracts under $500,000:• Per Loss $1,000,000Aggregate $1,000,000

Minimum Limits for Service Contracts over $500,001:• Per Loss $3,000,000Aggregate $3,000,000

Crime Coverage: 5. Coverage shall include employee dishonesty, forgery, or alteration and comput-er fraud. If Contractor is physically located on [College/University] premises, third-party fi delity coverage extension shall apply.

Th e policy shall include coverage for all directors, offi cers, agents, and employees of the Contrac-tor.

Th e bond or policy shall include coverage for extended theft and mysterious disappearance.• Th e bond or policy shall not contain a condition requiring an arrest and conviction.• Minimum Limits:•

Per Loss $1,000,000

B. Additional Insurance Requirements: Th e policies shall include, or be endorsed to include, the follow-ing provisions:

On insurance policies where 1. [College/University] is named as an additional insured, [College/University] shall be an additional insured to the full limits of liability purchased by the Contrac-tor, even if those limits of liability are in excess of those required by this contract.Th e Contractor’s insurance coverage shall be primary insurance and non-contributory with re-2. spect to all other available sources.


C. Notice of Cancellation: Each insurance policy required by the insurance provisions of this contract shall provide the required coverage and shall not be suspended, voided, or canceled except after thirty (30) days prior written notice has been given to [College/University], except when cancellation is for non-payment of premium, then ten (10) days prior notice may be given.

D. Acceptability of Insurers: Insurance is to be placed with insurers duly licensed or authorized to do business in the state of [your state] and with an “A.M. Best” rating of not less than A- VII. [College/Uni-versity] in no way warrants that the above-required minimum insurer rating is suffi cient to protect the Contractor from potential insurer insolvency.

E. Verifi cation of Coverage: Contractor shall furnish [College/University] with certifi cates of insurance (ACORD form or equivalent) as required by this contract. Th e certifi cates for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf.

All certifi cates and any required endorsements are to be received and approved by [College/University] before work commences. Each insurance policy required by this contract must be in eff ect at or prior to commencement of work under this contract and remain in eff ect for the duration of the project. Failure to maintain the insurance policies as required by this contract or to provide evidence of renewal is a ma-terial breach of contract.

All certifi cates required by this contract shall be sent directly to [College/University] at the address shown. Th e project/contract number and project description shall be noted on the certifi cate of insurance. [Col-lege/University] reserves the right to require complete, certifi ed copies of all insurance policies required by this contract at any time.

F. Subcontractors: Contractors’ certifi cate(s) shall include all subcontractors as additional insureds under its policies or Contractor shall furnish to [College/University] separate certifi cates and endorsements for each subcontractor. All coverages for subcontractors shall be subject to the minimum requirements identifi ed above.

G. Approval: Any modifi cation or variation from the insurance requirements in this contract shall be made by the risk management department or _______________, whose decision shall be fi nal. Such action will not require a formal contract amendment but may be made by administrative action.


Appendix 4: Short-Term Lease Agreements, Special Events, and Commercial Lease of Premises

Th e following is an example of the general considerations and minimum insurance requirements for short-term lease agreements, special events, and commercial lease of premises of [College/University] owned premises and for services rendered to [College/University] by specifi c service providers.

Th ese insurance requirements need to be inserted into the insurance section of the contract.

Insurance and Related RequirementsMinimum Insurance Coverages and RequirementsTh e [Lessee/Contract Provider] shall obtain and maintain the minimum insurance coverages set forth below. By requiring such minimum insurance, [College/University] shall not be deemed or construed to have assessed the risk that may be applicable to the [Lessee/Contract Provider] under Contract Number ____________. Th e [Lessee/Contract Provider] shall assess its own risks and, if it deems appropriate and/or prudent, maintain higher limits and/or broader coverages. Th e [Lessee/Contract Provider] is not relieved of any liability or other obligations assumed or pursuant to the contract by reason of its failure to obtain or maintain insurance in suffi cient amounts, duration, or types.




Workers’ Compensation and Employers’ Liability 3. – Workers’ Compensation (Coverage A) and Employers’ Liability (Coverage B)Property for Commercial Lease Tenants 4. – Must contain Waiver of Subrogation language that clearly states the insurer paying any claim will not seek reimbursement from the [College/Uni-versity].Pollution Liability 5. – If tenant occupancy creates a pollution exposure, this coverage is required, which can be accomplished by adding ISO endorsement CG2415 Limited Pollution Liability Extension or its equivalent to the CGL policy. If they transport hazardous materials, ISO en-dorsements CA9948 and MCS-90 must be added to the business automobile policy. A separate pollution legal liability policy is also acceptable.


Limits RequiredTh e [Lessee/Contract Provider] shall carry the following limits of liability as required below:


Products/Completed Operations Aggregate $2,000,000Each Occurrence Limit $1,000,000

Personal/Advertising Injury $1,000,000Damage to Rented Premises $50,000Medical Payments (Any One Person) $5,000



$500,000$100,000

Umbrella LiabilityEach Occurrence Limit $1,000,000General Aggregate Limit $1,000,000Products/Completed Operations Aggregate $1,000,000

Property InsuranceProperty insurance shall be written on a Covered Cause of Loss-Special Form, replacement cost cov-1. erage, including coverage for fl ood and earth movement.[College/University] 2. shall be named as a loss payee on property coverage for tenant improvements and betterments.If property coverage on the building is required, 3. [College/University] shall be named as an additional insured-owner/loss payee.

Coverage for Lessee’s Tenant Improvements, Fixtures – 100% replacement cost• Coverage on Building (required if Lessee is sole occupant) – 100% replacement cost• Coverage for Loss of Rents using ISO form CP 15 03 06 07 or equivalent – Amount equal to all • minimum annual rent and other sums payable under the lease


Additional RequirementsCommercial General Liability (CGL)[Tenant] shall name [College/University] and its [Board of Regents/Trustees], offi cers, employees, agents, and volunteers as Additional Insureds on ISO endorsement CG 2011 Additional Insured – Managers or Lessors of Premises or its equivalent.

All PoliciesMust be written on a primary basis, non-contributory with any other insurance coverages and/or self-• insurance carried by [College/University].Must include a Waiver of Subrogation Clause.• May not be non-renewed, cancelled or materially changed or altered unless thirty (30) days advance writ-• ten notice via certifi ed mail is provided to [College/University].


Appendix 5: Additional Insured Endorsements

Schedule of Additional Insured Endorsements

CG 20 10 Additional Insured—Owner, Lessees, or Contractors

CG 20 11 Additional Insured—Managers or Lessors of Premises

CG 20 26 Additional Insured—Designated Person or Organization

CG 20 28 Additional Insured—Lessor of Leased Equipment

CG 20 31 Additional Insured—Engineers, Architects, or Surveyors

CG 20 32 Additional Insured—Engineers, Architects, or Surveyors Not En-gaged by the Named Insured

CG 20 33 Additional Insured—Owners, Lessees, or Contractors—Automatic Status when Required in Construction Agreement with You

CG 20 34 Additional Insured—Lessor of Leased Equipment—Automatic Status when Required in Lease Agreement with You


Appendix 6: Defi nitions of Common Terms

From International Risk Management Institute, “Glossary of Insurance and Risk Management Terms,” http://www.irmi.com/online/insurance-glossary/default.aspx.


Appendix 7: Example Request Letters

Date:

To:

To Whom It May Concern:

We recently received a contract between _________________________ and [College/University]. In order for this contract to be approved, we need a Certifi cate of Insurance SHOWING the following (as identifi ed by checkmark):

Certifi cate of Insurance (evidencing) Commercial General Liability (Limits as required in contract)

General Aggregate to apply per project basis [College/University] and its [Board of Regents/Trustees], offi cers, employees,

agents, and volunteers added as additional insured as respects all projects Automobile Liability Workers’ Compensation and Employers’ Liability Umbrella Liability (Limits as required in contract) Professional Liability (Limits as required in contract) Pollution Liability (Limits as required in contract) Builders Risk/Installation Floater (Limits as required by contract)

Note (regarding the General Liability coverage): Please be sure to name [College/University] and its [Board of Regents/Trustees] (as stated in the contract) as an additional insured and so state on the Certifi cate of Insurance. Our records indicate that your Certifi cate of Insurance currently on fi le with us has either expired or will be expiring. Please have your insurance agent send us a new Certifi cate of Insurance evidencing the following (as identifi ed by check mark):

Commercial General Liability General Aggregate to apply per project basis [College/University] and its [Board of Regents/Trustees], offi cers, employees,

agents, and volunteers added as additional insured as respects all projects Automobile Liability Workers’ Compensation and Employers’ Liability Professional Liability Pollution Liability Umbrella Liability Builders Risk/Installation Floater

If you have any questions, please call me at ______________.

Date:

To:

To Whom It May Concern:

Thank you for forwarding the Certifi cate of Insurance. After review, the certifi cate does not refl ect required limits and/or coverages as previously requested. Please amend the certifi cate form to refl ect the following:

General Liability

Limits of $1,000,000 per Occurrence Note: This may be accomplished by providing evidence of Umbrella Liability with limits of $1,000,000 Each Occurrence/$1,000,000 Aggregate

General Aggregate is to apply on a “per project” basis Shall name the [College/University] and its [Board of Regents/Trustees], officers,

employees, agents, and volunteers added as additional insured as respects all projects

Evidence of Automobile Liability

Workers’ Compensation and Employers’ Liability

Professional Liability (Limits and endorsements as outlined in contract)

Pollution Liability (Limits and endorsements as outlined in contract)

Umbrella Liability (Limits and endorsements as outlined in contract)

Builders Risk/Installation Floater (Limits and endorsements as outlined in contract)

If you have any questions, please call me at ______________.

Sincerely,

third-party contract insurance guidelines - bcn

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