Page 254 - Urban Construction Project Management

Insurance and Bonds 209
Errors and Omissions Insurance

This is the professional liability insurance for the CM/GC and design professionals.
CM/GCs cannot easily obtain architectural or engineering services Errors and Omissions
(E&O) coverage. The CM/GC must be careful with this type of insurance, especially if
involved with a design-build project. Chapter 19 covers design-build projects further.

Environmental Liability Insurance

This is a specialized insurance policy to cover pollution and hazardous material dam-
ages such as asbestos, mold, lead paint, medical waste, fuel oil, etc. The coverage under
the commercial general liability (CGL) policy is very limited, and a separate policy
with broader environmental coverage is often obtained to deal with these matters. It is
recommended that the owner directly hold the contract for environmental work and
provide the insurance policy for the appropriate coverage, with the CM/GC as the addi-
tional named insured.

Workers’ Compensation Insurance
Workers’ Compensation (WC) coverage is a state mandatory insurance to provide cov-
erage for the CN/GC’s workers if they are injured while performing their work. It pro-
vides for lost wages, medical coverage, and loss of partial or full ability to work
because of an accident on the job. See Chapter 5, Exhibit 5-28, which is a workers’
compensation table for trades in major cities.

Automobile Coverage

This provides coverage for all automobiles and trucks used in connection with the con-
struction of the project, as well as transporting personnel and material to and from the
project site. The insurance company will require the names and drivers license informa-
tion for all drivers operating vehicles covered under the policy. If a driver’s report from
the Department of Motor Vehicles is not good, that person may be excluded from cov-
erage under the policy, and thus should not drive company vehicles.

PROOF OF INSURANCE

The contract documents will define the types and levels of insurance requirements for the
project. Exhibit 10-1 is a sample insurance rider for when an owner-controlled insurance
program/contractor-controlled insurance program (OCIP/CCIP) may be used on a project.

It is not sufficient to identify only the coverage amounts, named insured’s, and types of
policies. Full compliance with the contractual insurance requirements, waivers of sub-
rogation, indemnifications, etc., must also be ensured. All insurance must be confirmed
initially with an apostle letter from the insurance company followed by a certificate of
insurance describing the coverage, insurance company issuing the policy, insurance
limits, named insured, and additional insured. An apostle letter is a letter of commit-
ment by the insurance company to provide the insurance coverage contractually
required for the project, prior to the actual issuance of the certificate of insurance. Proof