HomeMy WebLinkAbout1991-12-17; City Council; 11483; REVISION OF STANDARDS FOR INSURANCE AND SURETY BONDS1
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AB# // Yg-3 TITLE: REVISION OF STANDARDS FOR INSURANCE DEPT. H
MTG.1g-I ?-q/ AND SURETY BONDS CITY AT
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RECOMMENDED ACTION:
Staff recommends Council adopt Resolution No. q / - VL'J , revising the standards for ins
and surety bonds.
ITEM EXPLANATION
In April 1990, the Council amended Resolution No. 89-387 to require contractors, builders, subc
and other persons doing business with the City to obtain insurance and bonds from a compa
a Best rating of A:V. The resolution also allowed the City to accept bonds for small subdivisioi
surety companies that did not meet the Best financial size of $1 0,000,000 (Class V).
Since the amended resolution was adopted, some contractors have experienced difficulty in ok
insurance and bonds that are acceptable to the City. On the advise of the City Attorr
proposed resolution outlines the minimum insurance and bonding standards that are accep
the City and it expands and clarifies the requirements for automobile liability and v
compensation insurance.
The recommended standards for insurance and bonding are for a company to have a ratin
"Best's Rating Guide" of A- or better and a financial size of $1 0,000,000 (currently class V or
A Best rating of A- is excellent and this change does not substantially increase the City's ri$
In order to clarify our automobile liability requirements and to adequately protect the C
proposed resolution requires the policy to cover any vehicle used in the performance of the c
whether onsite or offsite, owned or nonowned or hired and, whether scheduled or nonsct
The certificate must state the coverage is for "any auto" and cannot be limited in any mannr
Workers' compensation insurance has had the same requirements as general liability and aut1
liability insurance. However, since the risk for workers' compensation is the contractor's anc
City's, the proposed resolution exempts the insurance company writing workers' compensati
the Best Rating of A-:V; however, the company must be authorized to conduct business in t
of California. The City will accept insurance policies written by the State Compensation In
Fund.
FISCAL IMPACT
There will be no additional expense to the City. If an insurance consultant is needed to eva
financial responsibility and performance capability of an insurance company. This expens
borne by the contractor.
EXHIBITS
1.
2.
Resolution No. 4 / -Ye3 .
Surplus Line Broker Affidavit - Exhibit "A"
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RESOLUTION NO. 9 1 - 4 0 3
RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, REVISING
STANDARDS FOR REVIEWING INSURANCE AND
SURETY BONDS
WHEREAS, the City requires contractors, builders, subdividers and other
persons doing business with the City to obtain various types of insurance or
bonds; and
WHEREAS, it is necessary to ensure that the insurance and surety
companies selected by those persons meet certain financial and performance
standards.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City oj
Carlsbad, California, as follows:
1.
2.
That the above recitations are true and correct.
That, except as expressly provided by law or bid specifications tc
the contrary, insurance or surety companies securing or insuring any obligatio]
or risk under an insurance policy or surety bond of which the City is a beneficiar
or an additional insured shall meet the following minimum standards:
a. The company shall be authorized to conduct the business (
insurance of a type required by the transaction in the Stai
of California as evidenced by listing in the offici
publication of the Department of Insurance of the State I
California. For liability insurance, the City may accept
surplus line carrier provided the City is provided with a COI
of a surplus line broker affidavit as shown in Exhibit
attached hereto. Any surplus line carrier must meet t
rating limitations included in Paragraph b below.
The company shall have a rating in the latest availal
"Best's Rating Guide" of "A-" or better and a financial si
of $10 million (currently class V) or better.
b.
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c. If a company is not listed by the State Insurance
Commissioner in the official publication of the Department
of Insurance, is not rated by Best's or does not possess
sufficient years of experience to be rated, or if the small size
of the insurance or surety obligation or other risk factors
justify a lessor standard, the City Attorney and the City
Manager may approve such company only if it produces
satisfactory evidence that its financial responsibility and
performance capability within the State of California is
sufficient to insure or secure adequately the subject risk or
obligation. The City may elect to contract for the services
of an insurance consultant, at the expense of the person
asking to use an insurance company not meeting the
standards listed in Paragraphs 2a and/or 2b above, tc
provide a financial responsibility and performance capabilitj
analysis and to provide recommendations to the Citj
thereon.
3. Contractors, builders, subdividers and other persons doing busines:
with the City who are required to provide automobile insurance shall provide i
policy from a company that meets the above standards and that covers an;
vehicle used in the performance of the contract whether on-site or off-site
whether owned, leased, non-owned or hired, and, whether scheduled or non
scheduled. The automobile insurance certificate must state the coverage is fo
"any auto'' and cannot be limited in any manner.
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4. Contractors, builders, subdividers and other persons are required
to provide proof of workers’ compensation insurance. A workers’ compensation
insurance company is exempt from the City‘s requirement for a Best’s Rating oj
A-:V, however, it must meet the standards listed in Paragraph 2a above. The Ciq
will accept workers’ compensation insurance policies written by the Statc
Compensation Insurance Fund as meeting this requirement.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the CiF
Council of the City of Carlsbad, California on the 17th day of
December , 1991, by the following vote, to wit:
AYES: Council Members Lewis, Kulchin, Larson, Stanton and Nyl
NOES: None
ABSENT: None
ATTEST:
aQC& 24- u
ALETHA L. RAUTENKRANZ, City Clerk
(SEAL)
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EXHIBITA
CITY OF CARLSBAD SURPLUS LINE BROKER AFFIDAVIT
Broker Name:
Address :
City/State/Zip:
Date:
Project Name:
Type of Insurance:
I certify that is the Broker of Record for
("Contractor") who is required to provide insurance under the specifications
of the above contract. I further certify that as Broker of Record for Contractor, I have contacted
the insurance companies listed below, all of whom meet the City's requirements included in
Resolution No. and all of whom have refused to Write the required policy due to the
type of risk involved.
Insurance Carrier:
Name of Contact:
Address:
Date:
Reason for Refusal:
Best's Rating Listed by State Insurance
Commissioner (Yes/No)
Insurance Carrier:
Name of Contact:
Address:
Date:
Reason for Refusal:
Best's Rating Listed by State Insurance
Commissioner (Yes/No)
e e
Insurance Carrier:
Nime of Contact:
Address:
Date:
Reason for Refusal:
Best's Rating Listed by State Insurance
Commissioner (Yes/No)
ConQactor is requesting that the City accept company who is a surplus
line carrier having an A-:V or better rating in the most recent issue of Best's Rating Guide and
who has an office within the State of California at the following address in order to effect service
of process.
Name of Surplus
Line Carrier:
Address:
City/ St atehip :
Address to effect Service of Process within the State of California.
Name:
Address:
City/State/Zip:
I certify under penalty of perjury that the foregoing facts are true and correct.
Dated:
Signed:
Broker of Record