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BONDS, INSURANCE & STOP PAYMENT NOTICES
These materials have been prepared by the CASBO San Diego- Imperial Section Purchasing Professional Council (or CASBO Associate Member). They have not been reviewed by State CASBO for approval, so therefore are not an official statement of CASBO
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CASBO FALL CLASSIC WORKSHOP:
BONDS, INSURANCE & STOP PAYMENT NOTICES
Long Beach, CAApril 5, 2013
Presented by:Gretchen M. Shipley; Fagen, Friedman, & FulfrostGuiselle Carreon, Director of Purchasing, Grossmont Union High School District
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AGENDA
Bonding
Insurance
Stop Payment Notices
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BONDING
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BONDING
Basics Types
Bid Payment Performance
Purpose Essential elements
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BONDING
Surety Admitted Surety Insurer as defined in
CCP § 995.120 A.M. Best rated A- or better A.M. Best Financial Size Category VII or
better Reject bonds issued by a
surety who does not meet or exceed these criteria.
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BONDING
So this just happened to your construction project…
…what do you do?
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BONDING
Process of Enforcing Bonds Contract unable or
unwilling to contract Contractor’s material
breach Dealing with the
contractor Bankruptcy Approval from surety
Notice of termination to contractor
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BONDING
Bonds claims process Notice of tender to surety Likelihood of takeover Retention of completion
contractor Takeover agreement
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INSURANCE
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INSURANCE
Different types Worker’s Compensation Employers Liability Commercial General Liability
Includes coverage for bodily injury, death, property damage and motor vehicle liability
Builders Risk
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INSURANCE
Determining limits: assessed risk / tiered
Construction agreement should list minimum coverage amounts for each policy of insurance required
Construction agreement should also list subcontractor insurance requirements
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INSURANCE
Owner Controlled Insurance Program (“OCIP”)
Government Code section 4420.5
School districts exempt from $50,000,000 project cost threshold
Implementation Required determination Considerations
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INSURANCE
Owner Controlled Insurance Program (“OCIP”) Completed operation coverage insurance Bid specifications Additional insurance coverage & surety
insurance Developing safety requirements Collective bargaining agreements
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“POP QUIZ, HOTSHOT”Which of the following is not one of the factors that must be considered when implementing an OCIP program:
A. Serious and willful workers compensation violations
B. Number of workplace complaints to Cal/OSHA during the past 5 years
C. Workers’ compensation experience modification factor
D. Injury prevention programs
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STOP PAYMENT NOTICES
Definition Elements of a valid stop payment
notice 20 day preliminary notice Contents Timely filed
How much to withhold? For how long? Lawsuit
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STOP PAYMENT NOTICES How much to withhold?
125% For how long?
Unconditional release/withdrawal
Release bond Failure to file a
counteraffidavit Failure to timely commence
an action Lawsuit to enforce dismissed
Lawsuit
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STOP PAYMENT NOTICES
Lawsuit Timing Service on the public
entity
Tender a defense
Stay away!
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SB 189
Effect “Public Works Contract” Period for Recording Notice of
Completion Completion of a Public Work of
Improvement Stop Payment Notice Fee New & Standardized Service
Requirements
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Q & A