Insurance for Design-Build Projects - Design-Build for Water and Wastewater Projects - page 155

coverage is an injured employee's sole remedy against his or her employer with respect to
work-related injuries. General damages for pain and suffering and punitive damages for
employer negligence are generally not covered.
As DB firms report their payroll for workers' compensation rating purposes, they will
likely report both design and construction classification codes. Codes for construction
tend to have higher rates than those for design, because of the increased risk of injury on
the job.
Design and construction firms subcontract often enough to know the importance of
requiring current certificates of insurance from the independent contractors and subcon-
tractors they hire. If a firm is unable to produce a current certificate for its subcontractor,
some states will make the hiring firm responsible for providing WC insurance for the sub-
contractor's employees, adding the payroll for those employees to the hiring firm's audit.
Contractual requirements for a waiver of subrogation are also probably not new to design-
ers and contractors. Owners often request this to protect themselves against subrogation
actions by insurers alleging contributory negligence. Some insurers resist providing this
coverage, and many states disallow the use of WC waivers.
Umbrella
Umbrella coverage exists to provide catastrophe coverage for an insured. It acts in three
scenarios: (1) excess coverage over other liability insurance carried by the insured; (2)
primary coverage for liability exposures when the applicable underlying policy excludes
coverage and the umbrella policy does not; and (3) replacement coverage for underlying
liability policies when limits are reduced or exhausted by loss.
It is important to note that the umbrella tower provides limits of liability that are
separate and distinct from the PL limits. It resides over the GL, automobile liability, and
employers' liability policies, but not over the PL policy.
Property/Builders' Risk (BR)
Design and construction firms should be familiar with a standard property policy, which
provides first-party coverage when the firm's property is damaged. Design-build firms
should also familiarize themselves with builders' risk coverage, which covers damage to
a project during the course of construction. Builder's risk policies may be purchased by
the project owner or the general contractor and, regardless of who arranges the coverage,
should include the project owner, construction manager, contractor, and subcontractors
of every tier as “named insureds.” Each party has an insurable interest in the project and
contractual responsibility for potential damage. By covering the interests of all parties on
a single policy, the BR policy generally does away with subrogation issues.
Like property policies, BR policies are most often written on an all-risk basis, mean-
ing coverage is provided for all perils unless specifically excluded. All fixtures, materials,
supplies, machinery, and equipment that will be used on or are incidental to the construc-
tion project are usually covered in the base form. The policy may need to be endorsed to
cover temporary structures, construction fencing, existing property, property of others,
office trailers, underground piping, landscaping materials, and property in transit. Cover-
age for this second list of property is usually provided for a sublimited amount. Generally