Builder's Risk and CGL Insurance for Construction Projects...

transcript

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Presenting a live 90-minute webinar with interactive Q&A

Builder's Risk and CGL Insurance for

Construction Projects: Mitigating

Developer and Contractor Risks Evaluating Scope of Coverage, Covered Losses, Policy Exclusions,

Additional Insured Endorsements and More

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

TUESDAY, AUGUST 2, 2016

Jennifer A. Cranston, Shareholder, Gallagher & Kennedy, Phoenix

James M. Hoey, Partner, Clausen Miller, Chicago

John R. Musitano, Jr., Partner, Cox Castle & Nicholson, Los Angeles

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Builder’s Risk and CGL

Insurance for Construction

Projects: Mitigating Developer

and Contractor Risks

John R. Musitano, Jr., Cox, Castle & Nicholson LLP

jmusitano@coxcastle.com

CLE webinar on Tuesday, August 2 @

1:00pm EDT

Strafford Live CLE Webinars

Jennifer A. Cranston, Gallagher & Kennedy PA

jennifer.cranston@gknet.com

James M. Hoey, Clausen Miller PC

jhoey@clausen.com

Overview & Introduction

• Insurance Goals as a Component of

Comprehensive Risk Management

Strategy

• Avoid, Minimize, Shift & Insure Risks

• Ever-Changing Market & Legal

Environment

Types of Insurance –

Common Third Party Policies

• Commercial General Liability Insurance (CGL)

Traditional CGL Policy

Wrap-Up Policy (OCIP or CCIP)

• Excess/Umbrella

• Automobile (3rd party and 1st party)

• Workers Compensation

• Errors & Omissions (E&O)/Professional Liability Policies

• Directors & Officers (D&O)

• Employment Practices Liability Insurance (EPLI)

Types of Insurance –

First Party Property Insurance

• Commercial Property

• Builder’s Risk Insurance

Insurance Alternatives

• Captives, Risk Retention

• “Self-Insured”

Key Insurance Documents

• Certificates of Insurance

• Evidence of Property

Insurance

• Additional Insured

Endorsements

Certificates of Insurance

• Evidence of liability insurance policies, including key policy terms (carrier, named insured, policy term, limits, cancellation, additional insureds)

• Key Issues Not binding on insurer

Named Insured

Limits and policy period

Cancellation

Certificates of Insurance

Types of Insurers/Ratings

• Types of Insurers

• Ratings by A.M. Best

Company

Financial Strength Rating

Financial Size Category

Builder’s Risk Insurance

• Property Policies

• Builder’s Risk Overview

• Compare vs. Standard

Commercial Property and CGL

Policies

• Property/Interests Covered

Property covered

Property not covered

• Property/Interests Covered

Parties and additional interests covered

When is the property covered

• Coverage Scope – Physical

Loss and Damage

Requirement for direct physical loss and damage

Key issues

• Coverage Scope – Perils

Covered

Policy types “All Risks” or “Special Causes of

Loss”

“Named Perils” or “Basic Form”

Policy forms

• Cover all damage during

construction

Key Exclusions, including faulty workmanship

Exceptions to exclusions

• Valuation of Loss

Insurable value of project

“Replacement cost” means the actual cost to repair or replace the damaged property, without depreciation

Compare, “Actual cash value” means the value of the property at the time of loss, in its depreciated condition

• Limits

Policy limits

Coinsurance

Agreed Amount Endorsement

Policy sublimits

• Soft Costs/Business Interruption

Coverage

Soft costs coverage

Delay claims/business interruption coverage

• Waiver of Subrogation

• Third Party Policies

• By endorsement – an express

subrogation waiver endorsement

from the carrier is required

• Automatic waiver – many policies

allow an insured to waive the

carrier’s right to subrogate as long as

the insured’s agreement was

executed per a written contact before

the loss

• Key Policies Conditions

Notice and proof of loss

Suit Limitations

Commercial General Liability

Insurance

• CGL Policy Types

• CGL Policy Forms

Insurance

• Coverage for Bodily Injury and

Property Damage

• Personal and Advertising Injury

Coverage

• Duty to Defend and Duty to

Indemnify

Insurance

• Key Construction-Specific CGL

Issues

Triggers of Coverage

Construction defect as an occurrence

Insurance

• Timing of Property Damage

Damage/loss occurring during policy period

Progressive losses

Allocation between multiple policy periods and insurers

Insurance

• Other procedural issues

Jurisdictional split over coverage for post-demand but pre-lawsuit repairs

Timing of tender and insurer’s approval of settlement

Insurance

• Policy Limits Per “occurrence” limit

General aggregate limit

Products/completed operations aggregate

• Defense costs inside or outside limits?

• “Per Project” Aggregate Limits Endorsement

Insurance

• Who is an Insured?

• Named Insureds, Additional

Named Insureds, automatic

insureds

Insurance

• Excess Liability Policy

• Umbrella Policy

Insurance

• Deductibles

• Self-Insured Retentions

Insurance

• Interplay with Builder's Risk

Coverage

CGL coverage excess of builder's risk coverage

CGL exclusions for damage to project during course of construction

Exclusions applicable to property damage during ongoing operations

Addressing Builder’s Risk And CGL

Interface

• Negotiating policy forms

• Noninsurance risk

management strategies

• Managing dual track tenders

THANK YOU!

John R. Musitano, Jr., Esq. Partner Cox, Castle & Nicholson LLP 2029 Century Park East Suite 2100 Los Angeles, CA 90067 P: 310.284.2212 E: jmusitano@coxcastle.com www.coxcastle.com

Jennifer A. Cranston, Esq. Shareholder Gallagher & Kennedy PA 2575 East Camelback Road Suite 1100 Phoenix, AZ 85016 P: 602.530.8191 E: jennifer.cranston@gknet.com www.gknet.com

James M. Hoey, Esq. Partner Clausen Miller PC 10 South LaSalle Street Chicago, IL 60603 P: 312.606.7493 E: jhoey@clausen.com www.clausen.com