- Go to Aircraft Liability insurance clause.
- Aircraft Liability has a medical coverage option. If chosen, this pays regardless of fault. There is no deductible. It is intended to pay medical, surgical, hospital and funeral expenses up to the applicable limit for occupants of the airplane. Crewmembers may be included in this coverage.
- Unlike many other forms of insurance, most aviation insurance is negotiated. The price for the contractor’s premium isn’t read off a chart. It is a rate arranged through a broker and underwriter. Insurance coverage is underwritten based on many guidelines, including but not limited to, claims experience, financial stability, length of time in business, length of time with current insurer, etc.
- In some cases, an excess limit of aviation liability combined with the proper primary limit can provide higher limits of protection for the contractor. This coverage relies on the underwriting already performed by the primary insurance carrier.
- Helicopter insurance is more expensive than fixed-wing aircraft insurance. Helicopters represent only about 8% of the worldwide general aviation fleet, making it difficult for underwriters to "spread the risk." Also, helicopters statistically present a higher number of accidents and fatalities per flight hour than the general aviation fleet as a whole. As a result, a higher premium is required to cover the expected losses from this market segment. Helicopters operate in a unique environment (low altitude VFR with birds, wires and poles), are often used for hazardous missions (law enforcement, news gathering, sling loading) and, arguable, have a greater propensity for human error due to maintenance and flight proficiency issues.
- Limit Definitions:
- If the limit of Aircraft Liability has no sub-limits, it is considered a "smooth" limit. A smooth limit is a limit of liability that offers a combined single limit of coverage that applies to all bodily injury and property damage claims. A specified maximum amount can be paid out for a covered occurrence in any combination - passenger bodily injury, or other person’s bodily injury and/or property damage.
- When the limit of Aircraft Liability has a sub-limit, the coverage is usually a combined single limit of coverage that applies to all bodily injury and property damage claims. However, a reduced or limited amount of coverage, i.e., a sub-limit, from the combined single limit of coverage is available to pay for claims resulting from passenger bodily injury.
- Go to Types of Bonds.
- Surety Bond - A contract surety bond is a three-party agreement whereby the surety guarantees to the obligee (the owner, i.e., City) that the principal (the contractor) is capable of performing the contract. A bond is different from insurance - it is a simple guarantee. A surety company will assess the contractor’s entire business operation, checking for adequate financial resources, necessary experience, organization, existing work load and its profitability, and management skills to carry on the business and successfully complete the project for which the bond is required. When it issues a bond, the surety company has verified that the contractor is capable of performing the job. The contractor’s premium is based upon this assessment of loss experience, assets and finances.
- The surety company has obligations to both the owner, i.e., the City, and the contractor. If the contractor and owner disagree on contract performance issues and the owner declares the contractor in default, the surety must investigate the claim. The surety has several alternatives for response should the contractor be in default:
- The surety company determines its response. Ultimately, it will seek full reimbursement from the contractor.
- Finance the original contractor or provide support necessary to allow the contractor to finish the project;
- Arrange for a new contractor to complete the contract;
- Assume the role of the contractor and subcontract out the remaining work to be completed; or
- Pay the penal sum of the bond. Note: The amount in which a bond is issued is the "penal sum" or the "penalty amount" of the bond.
- Go to Builders´ Risk insurance clause.
- Soft Costs Coverage - Added as an endorsement. Covers various incidental expenses resulting from a covered physical loss to a building project. Coverage differs among insurers , however, costs likely covered include:
- Additional interest on funds borrowed to finance reconstruction or repairs.
- Additional real estate taxes.
- Additional advertising expenses. For example, to find new tenants for an office building whose completion date was delayed by several months due to a covered peril.
- Additional costs and commissions resulting from the renegotiation of a lease.
- Additional architects´ and engineers´ fees.
- Additional insurance premiums. For example, for the additional period of time required to rebuild or repair the building.
- Additional legal and accounting fees.
Commercial General Liability
- Go to Commercial General Liability insurance clause.
- Bodily Injury - Bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time.
- Contractual Liability- A portion of Commercial General Liability (CGL) coverage that allows limited coverage for liability assumed under the contract. The coverage allowed by Contractual Liability includes:
- Liability that the insured would have in the absence of the contract or agreement.
- Liability assumed under an "insured contract."
- Per CGL policy definitions, an "insured contract" means:
- A contract for a lease of premises.
- A sidetrack agreement (a railroad term).
- Agreements required by municipalities as a result of ordinances (not for work done for municipalities).
- Elevator maintenance agreements.
- Liabilities that "would be imposed by law in the absence of any contract or agreement."
- General Aggregate Limit - Under the standard CGL policy, the maximum limit of insurance payable during any given annual policy period for all covered losses other than those arising from the products and completed operations hazards.
- Personal and Advertising Injury -Injury , including consequential "bodily injury", arising out of one or more of the following offenses:
- False arrest, detention or imprisonment;
- Malicious prosecution;
- Wrongful entry into, or eviction of a person from, a room, dwelling, or premises that the person occupies;
- Oral or written publication of materials that slanders or libels a person or organization or belittles a person’s or organization’s goods, products, or services; or
- Oral or written publication of material that violates a person’s right of privacy.
- Products and Completed Operations Coverage - Covers losses arising out of a manufacturer, merchant, or distributor’s liability, due to injury or damage to a third party resulting from the use of a covered product. Covers the contractor for damage or injury to third parties resulting from something the contractor made, repaired, or installed. The loss or damage resulting from the service would be covered, not the contractor’s actual product.
Indemnity/Hold Harmless Clauses
- Indemnity/Hold Harmless clauses are a type of non-insurance transfer of liability to another party. However, the protection provided under these clauses, without insurance, is only as reliable as the assets of the entity backing up the City ment. Therefore, before waiving insurance coverage requirements, carefully consider the chance of something going wrong related to the contract services or activities.
- The hold harmless clause transfers the responsibility or liability of any claim arising out of contracted services to the contractor. The indemnification clause transfers the financial costs associated with the loss.
- Do not indemnify an independent contractor. The City is subject to the Oregon Tort Claims Act (OTCA), ORS 30.260 to 30.300. The OTCA limits the City ´s liability exposure. Independent contractors have unlimited liability. Indemnifying an independent contractor may make the City subject to unlimited liability.
- Consult with your AG Counsel for additional indemnification clauses, or prior to changing template indemnity clauses.
- Aggregate Limit - The maximum limit of coverage available under a liability policy during a specified period of time - usually one policy year or the policy period - regardless of the number of separate occurrences. Losses paid under coverages subject to aggregate limits reduce the amounts available for future losses. Aggregate limits may apply to a specific type of coverage, or they may apply to all losses under the policy.
- Bailee - An individual or business that has been given temporary custody of another’s property.
- Claims Made Coverage - A claim for injury or damage must be reported or filed during the policy period, in order to be covered by the policy. Generally, professional liability and high hazard products liability policies are written on a claims made basis. "Tail" coverage may be purchased to extend the time to report a claim that occurs during the policy period.
- Excess Liability Policy - Designed to provide coverage after the primary (underlying) liability policy limits have been exhausted. The coverage provided may not be as broad as the primary (underlying) liability policy.
- Following-Form Excess Liability Policy - An excess liability policy that "follows form" usually provides coverage identical to that provided by the primary liability policy. Note: Although many excess policies are called following-form, most contain endorsements that limit coverage. A true following-form excess policy would City that, except for the policy limits, all of the provisions and conditions of the designated underlying primary policy are incorporated into and adopted by the excess policy. The policy would contain no other provisions.
- Legal Liability - An obligation imposed as a matter of law upon a party for its negligence, violation of law, or failure to fulfill contractual obligations. Liability insurance policies provide coverage for an insured’s legal liability, excluding criminal acts, intentional torts or breach of contract.
- Loss Payee- The party named in a loss payable clause, to which insurance proceeds are to be paid in the event of damage to property in which the loss payee has an insurable interest.
- For example, some contracts that the City enters into require that the City name a vehicle or equipment owner as loss payee. This means that if the City damages or destroys the rented or leased equipment, the owner, not the City will get the money to repair the property.
- Manuscript Insurance Policies - A policy designed for specific needs and requirements of the insured, i.e., not a standardized insurance policy.
- Named Insured - An individual, business or organization that is designated by name as the insured(s) in an insurance contract. There can be others, although unnamed, who are protected by policy definition. A named insured under the policy has certain rights and duties. These include premium payment, premium refund, notice of cancellation and dividend participation.
- Occurrence Coverage - Covers all claims arising out of incidents occurring during the policy period, regardless of whether or not the policy is still in effect at the time that the claim is made. Occurrence-based coverage should be generally available, except on professional liability and pollution liability coverage.
- Self-Insured Retention (SIR) - The portion of a loss that is assumed by the contractor (insured). It is similar to a deductible. However, it differs from a deductible because the contractor is responsible to perform all functions normally undertaken by an insurance company for claims within the SIR. The contractor must adjust and pay for losses within the SIR. A loss must exceed the SIR limit before the insurance company will handle the claim.
- Third Party - The claimant under a liability policy. So called because the person making the claim is not one of the two parties, insured and insurer, to the insurance contract.
- Umbrella Liability Policy - Provides excess coverage over another underlying liability policy. Many times, an umbrella policy provides broader coverage than the primary (underlying) liability policy.
- Go to Marine Insurance clause.
- Hull insurance is mainly a property insurance covering loss of, or damage to a ship owner’s vessels and their equipment. Hull insurance often includes collision liability insurance as well, covering the ship owner’s liability for damage to other vessels and their cargoes resulting from a collision.
- Vessel in Navigation Status - Since an individual must have an employment-related connection to a vessel or identifiable fleet of vessels in navigation to qualify as a Jones Act seaman, what qualifies as a "vessel in navigation" is a crucial issue. The term "vessel" has been broadly defined to include any kind of watercraft or equipment capable of being used for transportation on navigable waters. In addition to the usual craft found upon rivers, lakes, and oceans, the following have been found to be vessels even though they lack motive power: houseboats, rafts, dredging barges, floating cranes, floating derricks, drilling barges, jack-up drilling rigs, and submersible or semi-submersible rigs. The controlling factors in determining whether a craft is a "vessel" are the purpose for which it was constructed and the business in which it is engaged.
- A vessel is considered to be "in navigation" when it is engaged as an instrument of commerce or in transportation on navigable waters. The term is construed liberally. Consequently, vessels which are in port or under repair are still considered "in navigation" as are certain vessels which are stationary, moored, or fixed in place. For example, a jack-up drilling rig on location is still considered to be "in navigation" even though it is not moving. However, a vessel which is under construction and still undergoing sea trials is not yet "in navigation" for Jones Act purposes.
Owners and Contractors Protective (OCP) Liability
- Go to Owners and Contractors Protective Liability insurance clause.
- Vicarious Liability is when one party is held responsible for the actions or conduct of another party based solely on the relationship of the two parties. For purposes of the OCP policy, it is when the Named Insured (Project Owner, i.e., City of Portland) is ultimately held liable for the acts of a hired contractor, sub-contractor or independent contractor who is working for or on their behalf.
Usually vicarious liability stems from injury or damage caused by an employee under a strict employer-employee relationship; but under certain circumstances the liability exposure of acts of non-employees, such as independent contractors, may be attributed to the project owner, i.e., City of Portland. The circumstances fall into three categories:
- work that is inherently dangerous;
- projects that impose non-delegable duties on the project owner under local, City or federal law; and
- negligence of the project owner in hiring an incompetent contractor.
The City of Portland has other alternatives when covering its vicarious liability. Other alternatives are to have the contractor hold the City harmless for losses arising out of the contractor’s operations or to have the contractor add the City as an additional insured under the contractor’s CGL policy.
- Go to Professional Liability insurance clause.
- Coverage - The coverage in a Professional Liability Policy pays for damages. These are damages that the insured becomes legally obligated to pay because of injury to another person. For the coverage to apply, this injury must be the result of a "wrongful act." A "wrongful act" means any act, error, or omission in the furnishing of the type of professional services that the policy was intended to cover.
- Exclusions - Professional Liability insurance doesn’t cover the Contractor if they don’t perform the duties of the contract, or don’t perform them correctly. The exception is if the professional makes an error or omission in their decisions.
- Limitations - Professional Liability Coverage generally limits certain types of exposures or losses. These reduced limits are called sub-limits. Examples of the types of exposures that have a sub-limit include allegations of sexual misconduct and corporal punishment. Often a Professional Liability Policy will have a limit of $1 million with a sub-limit of $25,000 for sexual misconduct.