INSURANCE AND RISK MANAGEMENT


 Insuring Agreement: What op- erational areas are covered? Many limit coverage to design functions only, which is acceptable for archi- tects and engineers but not GCs. The only insuring agreement acceptable is one that includes coverage for site supervision,


of the NAMED INSURED(S); and con- struction management when xxx is retained to perform such services pursuant to a con- struction management contract.”


If you don’t have similar language in inspection, safety, and


testing along with design. The GL policy with a 22 79 arguably includes coverage for these functions, but it is not certain how the courts are going to treat “means and methods.” It is most desirable to have a backup cov- erage provision that can be called upon after a coverage denial. In to- day’s claims environment, all car- riers are looking for language that will allow them to deny a large claim. Most jurisdictions protect negligent brokers who don’t hold themselves out as experts. The following is ac- ceptable coverage language that one of our carriers agreed to:


“Inspection and supervisory services as-


sociated with covered CONTRACTING SERVICES; value engineering; field changes to design; design performed by or on behalf


your professional coverage, you will not have adequate coverage for quasi-profes- sional field operations.


 Exclusions: Read and watch for lan- guage similar to: “WE will not cover YOU for any liability arising out of duties or responsibilities normally or customarily performed by a General Contractor, and subject to legal liabil- ity arising from a General Contractor’s non-professional standard of care and contractual undertakings, including, but not limited to, construction means, methods, techniques, sequences, pro- cedures or job site safety.” Other exclu- sions such as asbestos and EFIS should be evaluated.


 Policies are written on a claims- made basis unless a project policy is purchased. The GC and design professionals should continue to


provide such for at least five years, oth- erwise no coverage is extended beyond the policy expiration date.


Builder’s Risk The design-build contractor


should


ensure that resultant damage from design and construction defects is covered. Few, if any, carriers will indemnify for correction of defective work.


Surety Bond your design subcontractors. En-


sure action on the bond isn’t limited. The design-build era brings with it nu-


merous challenges, but insurance does not have to be one. It is important for you to know which coverages you need and to have a broker who can correctly provide them, year after year. 


Bob Mahan, Mahan Insurance Brokers, Inc., Tustin, CA is a registered engineer and a member of the California bar. He has served as chairman of the AGC of Califor- nia Legal Advisory Committee and served on the committee that drafted the new Standard Form Subcontract.


www.AGC-CA.org


Associated General Contractors of California 15


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