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Bureau of Internal Business Services

BIBS is the provider of central services for the City of Portland

1120 SW 5th Avenue, Room 1250, Portland, OR 97204

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Insurance Clauses by Type A - B

 

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Insurance Clauses By Type, A-B

 

Recommended Clauses

Notes

When Do They Apply?

AIRCRAFT INSURANCE

Aircraft Liability. Contractor shall obtain at Contractor’s expense, and keep in effect during the term of this Contract, Aircraft Liability Insurance. (Note: Use one of the options below to finish clause.)

  • Option 1: Limits for bodily injury and property damage liability coverage excluding passengers shall not be less than $_____________ per occurrence.  Aggregate limits over coverage shall not be less than $                        .
  • Options 2: Limits for bodily injury and property damage liability coverage including passengers shall not be less than $____________ per occurrence.  Aggregate limits of coverage shall not be less than $             .  Passenger liability has no sub-limit.
  • Option 3: Limits for bodily injury and property damage liability including limited passenger bodily injury shall not be less than $__________ per occurrence.  Aggregate limits of coverage shall not be less than $             .  Passenger liability limited to $____________ each person.

 

  • Aircraft Liability covers liability for bodily injury and property damage to others (i.e., injury to, or death of persons outside the aircraft as well as property damage or destruction done with the aircraft), arising out of the ownership, maintenance, or operation of an aircraft.
  • Aircraft Liability generally does not cover the crew. 
  • Passenger bodily injury liability is usually only required when carrying passengers other than crew members.
  • If carrying City passengers on behalf of the City make sure that (1) the pilot is certified to carry passengers and (2) the Aircraft Liability provides coverage for the passengers. 
  • Check the qualifications and certifications of the pilot.
  • Aviation excess liability coverage is available.  It can be purchased to "follow form" of a primary insurance policy.

 

Setting Limits:   

 

Ask questions such as, but not limited to:

  • Is the area populated or rural?
  • Are there any adverse conditions that may apply?
  • Will all flights be conducted during daylight hours under FAA visual flight rule conditions? Or, will the activity be done at night and require instrumental flying certification?
  • Do all of the airport lighting systems, at a minimum, have runway boundary and threshold lights?
  • Will water dropping activities (bucket work), external (sling) transportation, or similar work be involved?
  • Will the operations involve only crewmembers or other employees of the Contractor onboard the aircraft? Or, will this activity include the carrying of passengers other than those of the Contractor?
  • Will there be City employees, other subject workers of the City, City volunteers or any other third party on the aircraft? Will all of these passengers be carried on behalf of the City? If not, at whose risk will they ride?
  • Will the transportation of passengers be allowed at night in single engine aircraft?
  • Is the pilot certified to carry passengers?
  • Use when the contract involves the operation of an aircraft. 
  • If the contract involves the aerial application of any chemical, fertilizer, seed, or bait add Aircraft Aerial Application Liability coverage.

Aircraft Aerial Application Liability. Contractor shall obtain, at Contractor’s expense, and keep in effect during the term of this Contract, Aircraft Aerial Application Liability Insurance covering claims arising from spraying operations. Limit per occurrence shall not be less than $ __________.  Aggregate limits of coverage shall not be less than $             .   

  • Aircraft Aerial Application Liability covers liability for bodily injury and property damage to others, caused directly by aerial application by an aircraft of seeds, fertilizers or chemicals. 
  • The chemical application operation has specific hazards. Over spray, spraying the wrong field or area, improper application of the chemicals, use of the wrong chemicals and improper mixture of the chemicals are a few of the many concerns. Consider adding risk control measures to minimize these exposures, i.e., what controls are in place to make sure that the field or property being sprayed is contained and human access is restricted during spraying? 
  • Aerial operators do not normally carry passengers. Therefore,  aircraft liability passenger bodily injury coverage is not required. However, insure that the Contractor will not carry, and the contract does not require the carrying of passengers.
  • Aircraft Aerial Application Liability or chemical liability coverage is tailored to the aerial operators’ business activities. Insure that the aerial operator has the appropriate chemical category of coverage for your activity. 
  • It is a good business practice to require Pollution Liability coverage in addition to Aerial Application Liability coverage for aerial application activities. Aviation coverage excludes many pollution exposures such as actual or threatened discharge, seepage, migration, release or escape of pollutants.

Chemical categories include:

  • XC - Seeds and Fertilizers Only.
  • RC - Restricted Chemical.
  • CC - Comprehensive Chemical.

 

Extensions of liability coverage for CC include:

  • Adjacent Fields.
  • Crops Being Treated. (The wrong chemical on the right field, or the right chemical on the wrong field.)  
  • ·         Farmer/Owner/Grower.
  • Picloram (Tordon).
  • Setting Limits:   Assess the risks of the particular contract to determine appropriate insurance limits and risk control measures. 


 

  • Use in addition to Aircraft Liability whenever a contract involves the aerial application of seeds, fertilizers, or chemicals, as for agricultural purposes.
  • Chemical coverage for aerial application may be added as an endorsement to Aircraft Liability coverage.

AUTOMOBILE LIABILITY INSURANCE

Automobile Liability.  Contractor shall obtain, at Contractor’s expense, and keep in effect during the term of this Contract, Commercial Business Automobile Liability Insurance covering all owned, non-owned, or hired vehicles.  This coverage may be written in combination with the Commercial General Liability Insurance (with separate limits).  Limit per accident shall not be less than $ _______.
 

  • Defends and pays Contractor’s liability for property damage and bodily injury to others while operating owned, non-owned, and hired vehicles.

Setting Limits:   

  • Assess the risks of the particular contract to determine appropriate insurance limits and risk control measures.
    • Ask questions, such as, but not limited to: Will the Contractor transport groups of people for the state; use vehicles or carry cargo that could make an accident severe; have multiple vehicles on the road at any given time; travel out-of-City to do contract work; or bring heavy equipment or trucks onto your property? Will driving be only a small part of the contractual activities? Is there little or no chance that the City could be held responsible for the Contractor’s actions while driving?

 

  • Use whenever contracted work requires the use of a licensed vehicle on public roads, or on your property. This includes driving to and from, parking and using Contractor’s vehicles at work site.
  • Use whenever Contractor transports mobile equipment to the work site. (CGL insurance does not cover the transport of mobile equipment.)
  • Require CGL coverage for the liability exposure arising from the Contractor’s operation of the mobile equipment. Note: Mobile equipment is not considered to be an automobile, therefore an Automobile Liability policy provides no coverage for the operation of this equipment.
  • Make sure Automobile Liability includes all of the different types of vehicles the contractor will be using during the work. Coverage for owned is intended for the contractor’s vehicles; coverage for non-owned or hired vehicles is for rented, leased and use of employees privately-owned vehicles.
  • Do not require if contract performance involves no driving at all
  • Use of personal automobile insurance instead of commercial business automobile insurance may be appropriate for sole proprietors. Note: The sole proprietor must either carry a Business Use Endorsement or insure that business use is covered under their personal auto policy.
  • Goods with No Services:  CGL coverage is not required. The major exposure from this service is bodily injury or property damage as a result of the delivery of goods onto City premises, especially the back up of the delivery vehicle.  If goods are to be delivered by the vendor, use the standard  Automobile Liability clause, and place the following phrase at the beginning of the clause: "If the Contractor or its sub-contractor delivers any product, this clause is applicable. If a common carrier is used, it is not applicable." - Use limits appropriate for the exposure.
  • If Contractor transports hazardous substances, waste, and/or materials require Pollution Liability coverage.

 

BAILEES´ COVERAGE

Bailees´ Customers Insurance, Including Valuable Papers Coverage. Contractor shall obtain, at Contractor’s expense, and keep in effect during the term of this Contract, Bailees’ Customers Property Insurance covering any and all City property left in the care, custody, or control of the Contractor. Coverage shall include valuable papers, including but not limited to microfilm and electronic imaging. The coverage shall be written in a form and with coverage that is satisfactory to the City. Coverage shall be written on an occurrence basis. Limits of coverage per occurrence shall not be less than $ _______ (Insert maximum value of restoring documents, including reproduction and research) for each site or location. The deductible for this coverage shall not be less than $5,000.

  • Bailees’ Customer Insurance covers loss to property in a bailees’ care, custody, or control, whether or not the bailee is legally liable for the loss. If the property is damaged by a covered peril, the insurance will pay the loss. (For example, if the property is destroyed by a fire originating in a neighboring building, the bailee would usually have no legal liability to the customer for the loss.)
  • Check to insure that all costs, including extra expenses are included in coverage limits.
  • Check the policy exclusions to ensure that the type of valuable papers you have will be covered.
  • Coverage may or could be a part of IT Errors and Omissions coverage.

Setting Limits:   

  • Assess the risks of the particular contract to determine appropriate insurance limits and risk control measures.
  • Evaluate exposure to loss as the basis for coverage limits. Determine what it would cost to recreate or restore documents. Base this amount on the maximum probable loss that could occur, including the cost of reproduction and research.

 

  • Use when reproduction of lost data in the vendor’s care, custody, or control is a risk associated with the contract, such as in a microfilming or imaging contract . Commercial General Liability  insurance does not cover this exposure.

BUILDERS´ RISK INSURANCE

Builders´ Risk.  During the term of this Contract, Contractor shall maintain in force, at its own expense, Builders´ Risk insurance on an all risks of direct physical loss basis, including without limitation, earthquake and flood, for an amount equal to the full completed value of the covered structure or replacement value of alterations or additions. Any deductible shall not exceed $250,000 for each loss, except that the earthquake and flood deductible shall not exceed 2 percent of insured coverage for project or $250,000, whichever is greater.  The policy shall include an occupancy clause and list as loss payee the City of Portland, Bureau of _______.

 

 

 

  • Coverage for direct physical loss by a covered peril to an entire building or other structure at the "jobsite" during the course of construction, including limited coverage (See also Builders´ Risk Installation Floater) for the building supplies and materials that will become part of the covered structure.
  • Also covers:
    • Foundations, excavations, grading, filling, attachments, permanent fencing, and other permanent fixtures.
    • Scaffolding, construction forms or temporary fencing at the described "jobsite" and temporary structures at the described "jobsite".  
  • Does not cover:
    • Construction of structures other than buildings, i.e., tunnels, bridges, roads, culverts. etc.
    • Land on which covered property is located.
    • Other property not covered includes aircraft or watercraft, automobiles, contraband, money and securities.
  • Coverage should be endorsed to include “soft costs coverage”. This coverage insures various incidental expenses that may result from a physical loss by a covered peril to a building project. Soft costs coverage differs among insurers.
  • The most frequent causes of loss are fire, theft and vandalism.
  • Bonds do not cover this risk.
  • Alternative insurance called “wrap-up” may apply on very large construction projects ($90 million and up). 

 

Setting Limits:

  • New structure?  Limits should cover the full completed value of the building or structure.
  • Altering an existing structure? The limit should cover replacement value of alterations or additions.
  • Note: When a loss settlement is paid, if the limits of coverage are less than 100% of the full completed value of the covered structure or alterations, a penalty will be imposed by the insurer and only part of the loss will be paid. The value of the covered structure or alteration means "the total value of the property at the time construction would have been complete had there been no loss."

 

  • Use when a new building is being constructed, when substantial alternations will be made to an existing structure, i.e., bearing walls, lifting foundations, extensive construction, or when equipment is installed in an existing building.
  • Generally, Builders’ Risk coverage is not required for structures valued at under $100,000.  However, a risk assessment to determine if Builders’ Risk coverage is needed should be performed for every construction project.

 

Builders´ Risk Installation Floater. For projects with equipment, materials, or fixtures valued over $10,000 to be installed, in-transit, or stored off-site Contractor shall obtain, at Contractor’s expense, and keep in effect during the term of this Contract, a Builders´ Risk Installation Floater for coverage of Contractor’s labor, materials and equipment to be used for completion of work performed under this Contract.  The minimum amount of coverage to be carried shall be equal to the full amount of the Contractor’s labor, equipment, materials, or fixtures to be installed, in-transit, or stored off-site during the performance of this Contract. The policy shall include as loss payee the City of Portland, the Bureau of _______, the Contractor and its sub-contractors as their interest may appear.

  • Builders´ Risk Installation Floaters cover property installed at a work site by a particular contractor or sub-contractor. The coverage normally applies while the property is in transit or in temporary storage, and during the installation and testing process.
  • Installation floaters are generally associated with such property as plumbing, heating, cooling, and electrical systems but can be used to insure any property being installed. Carpeting, tile, windows, elevators, and machinery are examples of property that can be covered.
  • Theft and vandalism are covered.
  • Coverage is usually an add-on to a Builders´ Risk Policy, but may be purchased separately by sub-contractors on the project.
  • A separate policy may be written for specific job sites, or a blanket policy may be written for a contractor who has many jobs in progress at the same time.
  • Coverage usually ends at the earliest of the following:
    • When the financial interest of the contractor (insured) stops.
    • When the City (purchaser) accepts the property as complete.
    • When the policy expires or is canceled.
  • Coverage should extend until installed equipment, materials or fixtures are accepted by the City upon satisfactory completion by the Contractor.

 

Setting Limits:  

  • Minimum limits of coverage should be equal to the full amount of the Contractor’s labor, equipment, materials, or fixtures to be installed, in-transit, or stored off-site during the performance of the contract. 

 

  • Use whenever a building is being constructed, repaired, or remodeled and there will be more than $10,000 in building materials and supplies at a storage location,  in transit, or during the installation and testing process that are intended to become a permanent part of the building.

Note: Assess the risks of the particular contract to determine appropriate insurance limits and risk control measures.  Do not rely on insurance or bonds to cover all of the risk associated with your contract.  Many times outcome based statements of work, contract administration, and supervision are far better risk control measures to protect the state's interests than insurance or bonds.