Understanding Insurance Requirements Disadvantaged Business Enterprise (DBE) Supportive Services Program

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Imogene Marsh
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1 Understanding Insurance Requirements Disadvantaged Business Enterprise (DBE) Supportive Services Program The contents of this training course reflect the views of the author who is responsible for the facts and accuracy of the data presented herein. The contents do not necessarily reflect the official views or policies of the State of California or the Federal Highway Administration. This course outline does not constitute a standard, specification, or regulation.

2 Insurance A Practical Understanding First Party Coverages Coverage for your direct losses to physical assets you own/lease and insure. Buildings, Personal Property, Tools and Equipment Third Party Coverages Coverage to protect you from others who allege your negligence caused them bodily injury or damaged their property Workers Compensation Compulsory (Mandatory) coverage to cover medical costs and loss wages to your workers injured on the job 2

3 What Are the Different Types of Insurance? Commercial General Liability (CGL) Workers Compensation (WC) Automobile Liability Contractor s Equipment Floater Professional Liability (PL), also known as Errors & Omissions (E&O) 3

4 What Are the Different Types of Insurance? Builder s Risk Owner Controlled Insurance Program (OCIP) Contractor s Controlled Insurance Program (CCIP) 4

5 Standard Insurance Requirements Commercial General Liability Limits as stipulated by Owner or GC, never less than $1M per occurrence / $2 M Aggregate Naming Owner / GC as Additional Insured Coverages typically include: Bodily Injury Property Damage Products / Completed Operations Personal / Advertising Injury Medical Payments 5

6 Standard Insurance Requirements Umbrella / Excess Liability Higher Liability Limits Underwriting Loss History Scope of Work Payroll or Gross Receipts Exclusions Watch out for limitations Residential Townhouse Condos 6

7 Workers Compensation Mandated by law Statutory Limits by State Employers Liability Limits (egregious negligence) Underwriting Loss Experience (EMR) Classification of Employees Payroll Hourly Rates 7

8 Workers Compensation Safety Safety Safety Most impactful Insurance loading in bids Good Experience Competitive Advantage Bad Experience Harder to Compete 8

9 Workers Comp Insurance What is Workers Comp Insurance? Who Needs Workers Comp Insurance? Obtaining Workers Comp Insurance Workers Comp Rates Employers Responsibilities Controlling Costs Fighting Fraud Dispute Resolution 9

10 What is Workers Comp Insurance? Provides benefits to employees who are injured or become ill during the course of or due to employment Intended to ensure prompt & appropriate medical care is provided to workers Payment is provided through WC insurance without deductibles, co-payments or premium payments by the injured worker 10

11 What is Workers Comp Insurance? No-fault system injured worker does not have to prove the injury was someone else s fault in order to receive benefits Litigation is limited to issues such as whether injury was sustained on-the job or how much in benefits an injured worker is entitled to receive 11

12 Who Needs Workers Comp Insurance? The insurance is mandatory even if you only have one part-time employee Companies based out-of-state with employees hired in CA must also have CA workers comp Fine for employers with a lapse of a week or more may be minimum of $1,000 per employee Owners may be but do not have to be covered 12

13 Obtaining Workers Comp Insurance Through a broker Directly with an insurance carrier State Fund Large companies may be self-insured with state approval 13

14 How is the Premium Calculated? All insurance carriers set their own rates Base rate is based on worker classifications, size of payroll & risk characteristics of each business Your accident record can affect your premiums Experience modification - can reduce your rates if you have a good safety record Surcharge increases your rate based on high losses, frequency of accidents or poor safety controls Discounts are available for large firms, group plan membership, etc. There are minimum premiums based on your type of business 14

15 Employers Responsibilities Post the Notice to Employees (Form 13708) with the name of your insurer and information about benefits (Form is the Spanish version) Provide the New Employee Guide to Workers Comp brochure within 30 days of hire or before the end of the 1 st pay period 15

16 Employers Responsibilities (cont.) Notify employees of their right to pre-designate their personal physician or chiropractor and provide them with the pre-designation form Provide employee with claim form (3301) immediately upon learning of an injury, even if you suspect it may not be work-related Complete and send Employers Report within 5 days of injury 16

17 Employers Responsibilities (cont.) Establish, implement & maintain an effective injury and illness prevention program Encourage employees to inform the employer of hazards at worksite without fear of reprisal Develop, implement & maintain a written hazard communication program Inform employees about hazardous substances to which they may be exposed 17

18 Employers Responsibilities (cont.) Do not discriminate against an employee who has filed for workers comp This is a misdemeanor and can result in a fine and reinstatement and reimbursement to the employee Comply with OSHA standards 18

19 Controlling Costs Prevent injuries by having a safe workplace Have ongoing program of safety meetings Prompt reporting of injuries Failure to report can cause denials or delays in providing needed medical treatment Lessens possibility of litigation Studies show claims not reported promptly can cost 10 48% more than if they were reported within one week of injury Not reporting can negatively affect your experience modification 19

20 Controlling Costs (cont.) Early return to work program Decreases lost workdays by bringing injured employee back to work as early as possible Transitional work temporary change in job duties to work that is less physically or mentally demanding Modified work change in work environment, including job restructuring, equipment/tool modification or selection or workstation modifications Alternative work change in shift or reassignment to another job 20

21 Fighting Fraud Protect yourself Show your employees you care about them Maintain a safe work environment Educate your employees about workers comp Designate preferred medical providers Establish procedures for reporting accidents Handle fired workers with care 21

22 Fighting Fraud (cont.) Publicize your tough stance against fraud Investigate immediately Pave the way for a smooth return to work Neither deny nor confirm doubtful claims Don t knowingly provide false information for any reason Protect yourself by acting responsibly Enlist your employees help to fight fraud 22

23 Auto Liability Limits as required, no less than $1M Should schedule for Excess Liability Catastrophic Losses Seek no less than Scheduled Non-Owned and Hired Underwriting Schedule of Vehicles / GVW / Values Number of Employees for Non-Owned Driver MVR s Consider DMV Pull Program 23

Contractors Equipment Floater First party protection for owned / leased equipment / tools Cover for Replacement Cost Values Inland Marine form covers at

24 Contractors Equipment Floater First party protection for owned / leased equipment / tools Cover for Replacement Cost Values Inland Marine form covers at any location May include earthquake Must carefully schedule and update all equipment to be covered Underwriting Losses Storage Security Values X Rate 24

25 Professional Liability or Errors & Omissions Needed for any form of Construction Management / Consulting Design and/or Engineering Limits dictated by Owner or Prime Consultant No less than $1M per Occurrence Can be project specific or practice policy Claims made when coverage expires, it expires retroactively 25

26 Builders Risk Coverage for property damage to a structure under the course of construction including loss or damage to materials intended to be part of the building Sometimes covered by Owner/GC under a project blanket limit Can purchase a blanket policy to apply to all work throughout the policy period Project specific coverage Underwriting Loss History Construction Values Hard & Soft Costs 26

27 Builders Risk Read contract to confirm who is responsible for procuring and who is responsible for deductible What specific coverages are required: Earthquake? Flood? Water Damage? Mold? Make sure you are part of Named Insured if others purchase coverage Contract may stipulate waiver of subrogation disallowing the Builders Risk Carrier from pursuing responsible party 27

28 OCIP s & CCIP s or Wrap Ups Project specific coverage being provided by Owner OCIP or GC CCIP Coverages which may be provided General Liability, Builders Risk, Workers Compensation Evidence of Offsite General Liability and Workers Compensation still required Coverage only applies to on-site work 28

29 OCIP s & CCIP s or Wrap Ups Read bid specs and contract closely Do you bid with or without insurance loading Are you responsible for any deductibles Carefully calculate your normal insurance load as it may be deducted from your bid, get help from your broker 29

30 OCIP s & CCIP s or Wrap Ups You will be informed of coverage limits and terms. Compare to your own standard coverage Compliance You may be required to submit insurance rating information to validate insurance credit Owner provided coverages should be excluded from all change orders If Workers Compensation is provided you will have to provide monthly payroll information 30

31 OCIP s & CCIP s or Wrap Ups Workers Compensation losses will be included in your own statistical data and experience modification rating Familiarize yourself with OCIP/CCIP manual including claims reporting procedures and occupational clinics You may have to participate in a mandatory project safety program Maintain compliance with OCIP/CCIP requirements it may effect progress or retention payments 31

32 Thank you! Questions & Answers Evaluation Survey Link will be ed to you after this class Upcoming Classes Register today! Check s will be sent to you soon 32

33 Business Development Program Business Plan Development One-on-One Mentoring Free Technical Assistance Certificate upon Completion of Program Teaming/Partnering Access to Recorded Webinars Access to Valuable Business Resources Custom Level Bid Matching For more information: Visit:

Accounting & Understanding Financial Statements Disadvantaged Business Enterprise (DBE) Supportive Services Program

Accounting & Understanding Financial Statements Disadvantaged Business Enterprise (DBE) Supportive Services Program The contents of this training course reflect the views of the author who is responsible