Insurance for Design-Build Projects - Design-Build for Water and Wastewater Projects - page 150

Table 12-1. Types of insurance for design-build projects
Type of Insurance

Frequency of Use

Professional Liability (PL) Always

Owner's Protective Professional Indemnity
(OPPI)

Optional, use depends on project's other
coverage

Contractor's Protective Professional
Indemnity (CPPI)

Optional, use depends on project

Commercial General Liability (CGL)
• Additional Insureds (AI)

Always
• Optional, use depends on project

Owner's and Contractor's Protective Liability
(OCP)

Optional, rarely used

Railroad Protective Liability Required if project is on railroad premises

Automobile Always

Workers' Compensation and Employers'
Liability (WC/EL)

Always

Umbrella Optional, highly recommended

Property/Builders' Risk
• Transit/Cargo
• Delay Coverage

Optional, but typically used

Joint Venture Liability Only for joint venture arrangements

Controlled Insurance Programs Occasional, depending on project entities

Self-Insurance Rarely

Professional Liability

Professional liability (PL) insurance is structured to protect the design firm (i.e., the
design entity in either a traditional DBB or DB project) and its employees when claims for
loss, which can include economic damages, arise from an alleged negligent act, error, or
omission in the firm's performance of its professional services. Coverage extends only to
the insured design professional, including its past or present partners, executive officers,
directors, stockholders and employees, all while acting within the scope of their duties.
This type of policy does not cover claims made against the general contractor, a subcon-
tractor, a joint venture partner, or a project owner.
PL policies offer claims-made coverage, with the policy responding to any given
claim that is made within the current policy's effective dates. This is different than other
policies, which apply on an occurrence basis and respond based on the date on which
the damage-causing event took place. Until recently, all policies were issued on an occur-
rence basis. Two main problems with this approach surfaced over time. First, some occur-
rences were not discovered until many years after the problematic event, and second,
some occurrences recurred over a long period of time. Insurance companies found them-
selves paying for claims several years after the applicable policy expired and needing to