HomeMy WebLinkAbout1992-01-14; Municipal Water District; 145; Standards for Reviewing Insurance & Surety BondsCARLSBAD M KIPAL WATER DISTRICT - ‘“rENDA BILL $/@ \ ?A _
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~ LATE ‘rl_Y* TO ESTABLISH STANDARDS FOR REVIEWING INSURANCE AND SURETY BONDS /rlTV 1111D < I
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DEPT.
RECOMMENDED ACTION:
If Board of Directors concur, your action is to adopt Resolution No. 71.b establishing standards for acceptance of insurance and bonds.
ITEM EXPLANATION
The District requires contractors, builders, subdividers and other persons doing business with the District to obtain various types of insurance or bonds. It is necessary to ensure that the insurance and surety companies selected by those persons meet certain financial and performance standards.
In order to establish continuity between the City of Carlsbad and the District, the District needs to establish standards of acceptance of insurance and bonds. On the advice of General Counsel, the proposed resolution outlines the minimum insurance and bonding standards that are acceptable to the District and clarifies the requirements for automobile liability and workers' compensation insurance corresponding with currently adopted City standards.
The recommended standards for insurance and bonding are for a company to have a rating in the llBest's Rating Guide" of A- or better and a financial size of ten million dollars ($lO,OOO,OOO) (currently class V or better) A Best rating of A- is excellent.
In order to clarify our automobile liability requirements and to adequately protect the District, the proposed resolution requires the policy to cover any vehicle used in the performance of the contract, whether onsite or offsite, owned or nonowned or hired and, whether scheduled or nonscheduled. The certificate must state the coverage is for "any auto" and cannot be limited in any manner.
Workers' compensation insurance has had the same requirements as general liability and automobile liability insurance. However, since the risk for workers' compensation is the contractor's and not the District's, the proposed resolution exempts the insurance company writing workers' compensation from the Best Rating of A-:V; however, the company must be authorized to conduct business in the state of California. The District will accept insurance policies written by State Compensation Insurance Fund.
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FISCAL IMPACT
There will be a requirement of additional staff time in an unknown amount in reviewing bonds and insurance for conformity with the standards. If an insurance consultant is needed to evaluate the financial responsibility and performance capability of an insurance company, this expense will be borne by the contractor.
EXHIBITS
1. Resolution No. 3.a .3 to establish insurance and surety bond standards.
2. Surplus Line Broker Affidavit - Exhibit @@A".
RESOLUTION NO. 772
RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD MUNICIPAL WATER.DISTRICT OF CARLSBAD, CALIFORNIA, ESTABLISHING STANDARDS FOR REVIEWING INSURANCE AND SURETY BONDS
WHEREAS, the District requires contractors, builders,
subdividers and other persons doing business with the District 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 Board of Directors
of the Carlsbad Municipal Water Carlsbad of Carlsbad, California,
as follows:
1. That the above recitations are true and correct.
2. That, except as expressly provided by law or bid
specifications to the contrary, insurance or surety companies
securing or insuring any obligation or risk under an insurance
policy or surety bond of which the City is a beneficiary or an
additional insured shall meet the following minimum standards:
a. The company shall be authorized to conduct the business of insurance of a type required by the transaction in the State of California as evidenced by listing in the official publication of the Department of Insurance of the State of California. For liability insurance, the District may accept a surplus line carrier provided the District is provided with a copy of a surplus line broker affidavit as shown in Exhibit A attached hereto. Any surplus line carrier must meet the rating limitations included in Paragraph b below.
b. The company shall have a rating in the latest available "Best's Rating Guide" of **A-" or better and a financial size of $10 million or better.
C. If a company is not listed by the State Insurance
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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 District General Counsel and the District General 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 District 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, to provide financial responsibility and performance capability analysis and to provide recommendations to the District thereon.
3. Contractors, builders, subdividers andotherpersons
doing business with the District who are required to provide
automobile insurance shall provide a policy from a company that
meets the above standards and that covers any 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
coverages if for "any auto" and cannot be limited in any manner.
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4. Contractorts, builders, subdividers and other
persons are required to provide proof of workers' compensation
insurance. A workers@ compensation insurance company is exempt for
the District's requirement for a Best's Rating of A-:V, however, it
must meet the standards listed in Paragraph 2a above. The District
will accept workers' compensation insurance policies written by the
State Compensation Insurance Fund as meeting this requirement.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the
Board of Directors of Carlsbad Municipal Water District of
Carlsbad, California, on the 14th day of January I
1992, by the following vote, to wit:
AYES: Board Members Lewis, Kulchin, Larson, Stanton and Nygaard
NOES: None
ABSENT: None
A~RA-TE 2, Secretary 2, Secretary
(SEAL) (SEAL)
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EXHIBIT A
.
CARLSBAD MUNICIPAL WATER DISTRICT 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 (l'Contractorll) 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)
Insurance Carrier:
Name of Contact:
Address:
Date:
Reason for Refusal:
Best's Rating: Listed by State Insurance Commissioner (Yes/No)
Contractor is requesting that the City accept company who is a surplus line carrier having as 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/State/Zip:
Address to effect Service of Process within the State of California.
Address:
City/State/Zip:
I certify under penalty of perjury that the foregoing facts are true and correct.
Dated:
Signed: Broker of Record
Signed: