Risk Management Advisories
CONSTRUCTION PROJECTS - INSURANCE AND REPORTING
The OSBIE property policy includes a Reporting Requirement for Buildings Newly Acquired or Under Construction. We can categorize these projects into 3 types:
- Newly acquired or ground up construction – in either situation, this is when the Board has an entirely new location to be added to your property schedule.
- Capital Projects – these include retrofits where the Board has added square footage to an existing structure.
- Maintenance Work – these would include projects that do not add any significant capital structure to the building. An example for this type of project would be replacing a roof on a school.
For a newly acquired building or construction project where there is additional square footage to be insured, it must be reported to OSBIE within 90 days of acquisition or the beginning of construction. Best practice for reporting to OSBIE is for the Board to notify OSBIE at or before the contract is awarded - whether or not OSBIE is providing the Builder's Risk coverage. OSBIE provides excess coverage in the event that the Builder's Risk coverage is inadequate. This provides added protection for the school board. OSBIE has an obligation to report all newly acquired properties and construction projects to its reinsurers in a timely fashion in order to arrange for reinsurance to protect the interests of all OSBIE property Subscribers.
Capital projects/Retrofit which add capital value of $100,000 or greater also needs to be reported to OSBIE within 90 days of the beginning of construction.
Reporting is to be done on the OSBIE Property Change Form or New Location Property Form which can be obtained from your Board Office. This form can be completed and emailed or faxed to OSBIE.
CONSTRUCTION PROJECTS - INSURANCE
- LIABILITY INSURANCE
- PROPERTY INSURANCE (BUILDER’S RISK)
- RISK MANAGEMENT
When a building is in the course of construction or renovation, there are exposures that must be insured to prevent financial loss. Insurance requirements are generally set out in the Construction Tender Document. Two key elements are:
- The risk of being held legally liable for bodily injury or damage to property of others arising out of a construction activity.
- The risk of damage to the building itself while it is in the course of construction or renovation
A wrap-up liability policy is the preferred policy form for most construction projects. This policy is designed to protect all of the parties involved in the project. The coverage is available through the general insurance market and may be placed by either the contractor or the school board.
In smaller construction activities, such as renovations, the school board should ensure that the contractor carries general liability insurance to protect the contractor, any sub-contractors and the school board as an additional insured.
School boards utilizing their own employees to perform construction or renovation work such as erecting portables, making small additions to existing buildings or making internal renovations are protected against legal liability claims as are their employees engaged in the construction work.
In all cases, OSBIE's liability policy protects the school board and its employees for claims arising out of construction projects subject to any other insurance available to the school board.
It is not the intention nor policy of OSBIE to extend or provide general liability and/or errors and omissions and/or professional liability or any other type of liability insurance protection to contractors, sub-contractors, engineers, architects, surveyors, or to any other parties contracted for the project.
PROPERTY INSURANCE (BUILDER’S RISK)
Builder's Risk is specialized property insurance for construction projects. It protects the construction project and building materials while in transit or on premises against damages caused by property perils such as fire, windstorm, vandalism, etc. The amount of coverage should be no less than the value of the construction project. Coverage may include the value of an existing building, in the case of an addition, especially when the contractor has possession of the entire building. The coverage should be in effect for the entire period of construction, and should include the school board as an Additional Insured.
School boards should receive copies of the contractor's insurance to ensure that both Liability and Builder's Risk coverages are in effect; that the board is named as an additional Insured; and that the amount of coverage is adequate.
In some cases, the owner (school board) may decide to carry the Builder's Risk coverage. In these cases, OSBIE will provide coverage, upon receipt of an amended Tender Contract that shows that the owner is required to carry Builder's Risk and a completed Property Change Form that provides details of the project. The premium charged is based on the value of the project, with a minimum premium of $1,000. The maximum project value that can be covered by OSBIE is $20 million.
School board staff should ensure that the contractor's insurance certificates are received and checked prior to the start of construction. OSBIE should receive a copy of the contractor's Builder's Risk Certificate with the Property Change Form notifying us about the construction project. We will review the certificate to ensure it protects the school board.
Tender Contracts should set out clearly the contractor's obligations with respect to security of the construction site, such as fencing, patrols, etc. Construction projects are high-risk targets of vandals and are liability hazards. Attention to the security of the site, both from a property and liability perspective, is good risk management.
The Board should also receive a copy of the contractor’s WSIB certificate and if the contractor is hiring trades to ensure the contractor obtains certificates from all their sub-contractors.
A hot work permit system is an example of a pro-active risk management program that should be part of all construction or renovation projects. OSBIE produces hot work permits and wall kits that are available to members at no charge. To order a supply or for more information, email the risk management department at firstname.lastname@example.org or call 1-800-668-6724.
(REVISED 2015) E&OE
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