Report to Carson Reclamation Authority
Tuesday, September 03, 2024
Consent
SUBJECT:
Title
AUTHORIZE EXECUTIVE DIRECTOR TO APPROVE AND BIND A ONE-MONTH EXTENSION OF COVERAGE ON A COMMERCIAL GENERAL LIABILITY POLICY FROM UNITED SPECIALTY INSURANCE COMPANY (PRIMARY) AND ENDURANCE AMERICAN SPECIALTY INSURANCE COMPANY AND AMBRIDGE (LLOYD'S), EXCESS CARRIERS, PROCURED THROUGH MARSH RISK & INSURANCE SERVICES IN AN AGGREGATE LIMIT OF $10,000,000 ($1,000,000 PRIMARY/$4,000,000 PLUS $5,000,000 EXCESS) AT A PREMIUM NOT TO EXCEED $8,600.00 PLUS $273.48 IN SURPLUS LINES TAXES/FEES, PAID IN ADDITION TO THE PREMIUM, FOR THE ONE-MONTH PERIOD TO OCTOBER 12, 2024
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I. SUMMARY
This action authorizes the Executive Director to approve and bind a one-month extension of a commercial general liability policy with United Specialty Insurance Company (primary carrier) on a $1,000,000 per occurrence/$2,000,000 general aggregate; Endurance American Specialty Insurance for $4,000,000 in excess of the first $1,000,000; and Ambridge (Lloyds) for $5,000,000 in excess of the first $5,000,000, for a total of $10,000,000 in coverage. The premium is $8,600.00 for this one-month extension.
The extension would allow the general liability policy to renew at the same time as the property insurance policy, which term ends on October 12. It means the CRA would be in the renewal market for both policies at the same time, which is more efficient even though the carriers for the policies are different.
II. RECOMMENDATION
Recommendation
TAKE the following action:
AUTHORIZE the Executive Director to bind a one-month extension of coverage on behalf of the Carson Reclamation Authority on a Commercial General Liability Policy with United Specialty Insurance Company (primary carrier) on a $1,000,000 per occurrence/$2,000,000 general aggregate/$2,000,000 products-completed operations basis; Endurance American Specialty Insurance for $4,000,000 in excess of the first $1,000,000; and Ambridge (Lloyds) for $5,000,000 in excess of the first $5,000,000, for a total of $10,000,000 in coverage, procured through Marsh Risk & Insurance Services, with a total cost of $8,600.00 plus $273.48 in surplus lines taxes/fees, paid in addition to the premium, for the extension.
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III. ALTERNATIVES
TAKE another action deemed acceptable by the Authority Board.
IV. BACKGROUND
For the development of general liability insurance coverage in 2017-2018, the CRA worked with its brokers and with CAM-Carson, LLC to develop a General Liability Owners Controlled Insurance Program (OCIP). An OCIP covers multiple owners and contractors and places the claims management process in the hands of the property owner, as the policy sits in excess of the corporate GL coverage provided by the contractors on site (who would frequently have the primary liability for a GL incident) and is managed by a contractual OCIP administrator. The OCIP was bound in September 2018 for a period of five years and expired on September 12, 2023.
Since the CRA was not in construction mode in 2023, it was anticipated that the CRA would be covered as an additional insured by the GL coverage procured by the Cell 3, 4, and 5 Developer, Carson Goose Owner, LLC pursuant to the Insurance Administration Agreement (IAA) and would not have to acquire replacement coverage for the OCIP. The CRA was primarily only engaged in O&M activity and preconstruction activity then but is now preparing to commence construction on Lenardo at this time so the coverages will need to change because the risk has changed. Those changes will be reflected in the full-year policy presented to the Board in October.
The Insurance Administration Agreement with CGO requires that they provide insurance coverage for the under their policies, but the CRA is ahead of them in placing the GL and Property policies (both now binding in October) so there will be an adjustment to the policies mid-term when CGO’s policies become effective. The CRA is still responsible for coverage on the Lenardo work and any work it performs on Cell 1 or Cell 2 as well. Other details of the Policy include:
Deductible: $10,000 per incident (subject to contractor requirements described below)
Term: 9/12/2023 - 9/12/2024; 25% minimum earned premium
Insureds: Carson Reclamation Authority and a right to add Carson Goose Owner, LLC effective as of the closing date.
Coverage Grants:
(a) Bodily Injury and Property Damage: The insurer will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which the insurance applies. The insurer has the right and duty to defend the insured against any "suit" seeking those damages.
(b) Premises/Operations: This coverage is used to insure against claims arising out of a Named Insured’s ownership, maintenance or use of premises including any operations that are in progress.
(c) Products/Completed Operations. This coverage is used to insure against claims arising out of bodily injury and property damage that result from work performed at the designated project site.
Notable Coverage Items and Key Exclusions:
(a) Subsidence Exclusion - exclusion for losses arising out of any subsidence or earth movement, including any movements of land caused by or arising out of operations by or on behalf of the insured.
(b) Digging and Excavation Exclusion - exclusion for losses arising out of or related to digging, excavation, boring or any similar underground work of any nature unless the following specific conditions are met: (i) prior to digging, third-party locator has marked all underground lines and the insured retains a written response from locator; (ii) utility lines are disconnected or turned off during the digging; and (iii) insured maintains written records confirming the foregoing for 2 years following completion of activities.
(c) Contractor Warranty and Conditions - deductible increases to $50,000 unless contractors (i) maintain at least $1,000,000 per occurrence and $2,000,000 aggregate general liability limits of liability and (ii) contractually release and indemnify the insured for contractors’ acts and omissions.
(d) Total Pollution Exclusion (including per- and polyfluroalkyl substances and chlorine-chlorate).
(e) Other Key Policy Exclusions: (i) asbestos, (ii) arsenic, (iii) lead, (iv) sulfates, (v) EIFS, (vi) worker’s compensation, (vii) automobile liability, (viii) employment practices, (ix) silica and silica related dust, (x) professional services, and (xi) media run-off.
V. FISCAL IMPACT
The quoted premium is $8,600.00 plus $273.48 in surplus lines taxes/fees, paid in addition to the premium, for the one-month extension. This wouldn’t necessarily increase the CRA’s overall expenditure for insurance since it is relatively pro rata to the monthly GL insurance cost today.
VI. EXHIBITS
1. General Liability Policy Extension Coverage Details (pg. 5)
Prepared by: John S. Raymond, Executive Director