Insurance Requirements

Contracts and Agreements

Contractors and Vendors who conduct business with the City shall procure and maintain, for the duration of the contract/agreement (and for any additional period specified in the final executed contract/agreement) insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by them and their agents, representatives, employees, or subcontractors. Please note that insurance requirements may vary based on the nature of the services performed and the associated risk to the City. The information provided below is intended as general guidance; however, the final executed contract/agreement will govern the specific insurance requirements that must be met.

Sample Insurance Documents:

Construction Contracts Encroachment or Excavation Professional Services Agreement Special Event Permit

Insurance Provisions:

Insurance Limits

Coverage shall be at least as broad as:

Commercial General Liability (CGL): Insurance Services Office (ISO) Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury and personal & advertising injury with limits no less than $X,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.

The specific GL limit will be set based on the project’s risk. Typically, limits will be:

- $1-2 Million for Low Risk
- $2-3 Million for Moderate Risk
- $3-5 Million for High Risk
- +$5 Million for Very High Risk
Automobile Liability: Insurance Services Office Form CA 0001 covering Code 1 (any auto), with limits no less than $X,000,000 per accident for bodily injury and property damage.

The specific Auto limit will be set based on the project’s risk. Typically, limits will be:

- $1 Million for Low Risk
- $2 Million for Moderate Risk
- $5 Million for High Risk
Workers’ Compensation: insurance as required by the State of California, with Statutory Limits, and Employers’ Liability insurance with a limit of no less than $1,000,000 per accident for bodily injury or disease.
Professional Liability (if Design/Build): with limits no less than $X,000,000 per occurrence or claim, and $X,000,000 policy aggregate. The retroactive date must be shown, and this date must be before the execution date of the contract or the beginning of contract work. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of contract work. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective, or start of work date, the Contractor must purchase extended reporting period coverage for a minimum of five (5) years after completion of contract work. A copy of the claims reporting requirements must be submitted to the City for review.

Typically required in contracts or agreements that involve the City receiving professional advice or work product (engineering, architecture, legal, etc.) on which business decisions may be based. The limit requirement will be set on the potential risk to the City:

- $1M per occurrence, $2M aggregate for low risk
- $2M per occurrence, $2M aggregate for low risk
- $3M per occurrence, $3M aggregate for low risk

Additional Insurance Requirements for Special Risks

Additional insurance requirements may be imposed on certain vendors. Refer to Risk Management for individual review of the following types of services or products:

Builder’s Risk (Course of Construction): insurance utilizing an “All Risk” (Special Perils) coverage form, with limits equal to the completed value of the project and no coinsurance penalty provisions.
- Typically will only be required on projects related to City buildings (new construction, remodels, etc.)
Surety Bonds: Contractor shall provide the following Surety Bonds:
- Bid bond
- Performance bond
- Payment bond
- Maintenance bond

The Payment Bond and the Performance Bond shall be in a sum equal to the contract price. If the Performance Bond provides for a one-year warranty a separate Maintenance Bond is not necessary. If the warranty period specified in the contract is for longer than one year a Maintenance Bond equal to 10% of the contract price is required. Bonds shall be duly executed by a responsible corporate surety, authorized to issue such bonds in the State of California and secured through an authorized agent with an office in California.

- Bonds are typically only required on Capitol Improvement projects.

Contractors’ Pollution Legal Liability and/or Asbestos Legal Liability and/or Errors and Omissions (if project involves environmental hazards): with limits no less than $1,000,000 per occurrence or claim, and $2,000,000 policy aggregate. If the services involve lead-based paint or asbestos identification/remediation, the Contractors Pollution Liability policy shall not contain lead-based paint or asbestos exclusions. If the services involve mold identification/remediation, the Contractors Pollution Liability policy shall not contain a mold exclusion, and the definition of Pollution shall include microbial matter, including mold.

If the contractor maintains broader coverage and/or higher limits than the minimums shown above for all policies, the City requires and shall be entitled to the broader coverage and/or higher limits maintained by the contractor. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.

Typically required in contracts or agreements where the contractor/vendor is bringing in and using sizable amounts of hazardous chemicals that, if spilled, would require cleanup efforts.

Other Insurance that may be Required:

Products or services involving firearms, tobacco, alcohol, or controlled substances
Any unusual or high-risk activities, operations or products

Endorsements

Additional Insured:

The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Contractor including materials, parts, or equipment furnished in connection with such work or operations and automobiles owned, leased, hired, or borrowed by or on behalf of the Contractor. General liability coverage can be provided in the form of an endorsement to the Contractor’s insurance at least as broad as one of the following ISO ongoing operations Forms: CG 20 10 or CG 20 26 or CG 20 33 (not allowed from subcontractors), or CG 20 38; and one of the following ISO completed operations Forms: CG 20 37, 2039 (not allowed from subcontractors), or CG 20 40.

(Sample Endorsement)

Primary Insurance:

For any claims related to this project, the Contractor’s insurance coverage shall be primary insurance coverage at least as broad as ISO CG 20 01 04 13 as respects the City, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be excess of the Contractor’s insurance and shall not contribute with it.

(Sample Endorsement)

Umbrella or Excess Policy:

The Contractor may use Umbrella or Excess Policies to provide the liability limits as required in this agreement. The Umbrella or Excess policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying Commercial General Liability insurance.

(Sample Endorsement)

Waiver of Subrogation:

Contractor hereby agrees to waive rights of subrogation which any insurer of Contractor may acquire from Contractor by virtue of the payment of any loss. Contractor agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer. However, the Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City for all work performed by the Contractor, its employees, agents and subcontractors.

(Sample Endorsement)

Notice of Cancellation:

Contractor shall provide immediate written notice if (1) any of the required insurance policies is terminated; (2) the limits of any of the required polices are reduced; (3) or the deductible or self-insured retention is increased. In the event of any cancellation or reduction in coverage or limits of any insurance, Contractor shall forthwith obtain and submit proof of substitute insurance.

Acceptability of Insurers:

Insurance is to be placed with insurers authorized to conduct business in the state with a current A.M. Best rating of no less than A: VII, unless otherwise acceptable to the City.

This is a standard rating of insurance companies.

Other Insurance Provisions

Insurance Resources

For the convenience of applicants seeking insurance coverage (including special event and/or instructor-related coverage), the following links may offer policies for these types of activities. The City does not endorse, recommend, or warrant any specific provider, and the inclusion or order of these links does not imply preference or favoritism. This list is provided for informational purposes only and is not intended to be comprehensive; required coverage may be obtained from any qualified insurance provider in the commercial market. Applicants are responsible for selecting a provider, reviewing policy terms, and confirming that the coverage purchased meets the insurance requirements stated in the applicable permit or agreement.

Verification of Coverage

Contractor shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before work begins. However, failure to obtain the required documents prior to the work beginning shall not waive the Contractor’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements, required by these specifications, at any time.

Subcontractors

Contractor shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Contractor shall ensure that City is an additional insured on insurance required from subcontractors. For CGL coverage subcontractors shall provide coverage with a form at least as broad as CG 20 38 04 13.

Self Insured Retentions

Self-insured retentions must be declared to and approved by the City. At the option of the City, either: the contractor shall cause the insurer to reduce or eliminate such self-insured retentions as respects the City, its officers, officials, employees, and volunteers; or the Contractor shall provide a financial guarantee satisfactory to the City guaranteeing payment of losses and related investigations, claim administration, and defense expenses. The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.

This language is to help the City understand the potential financial risk a contractor/vendor may have in the event of a loss. The last part of this section enables the City to assist in satisfying any deductible or retention needed so the contractor/vendor's insurance can cover the cost of a claim if needed.

Special Risks or Circumstances

The City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other circumstances.

232 W. Sierra Madre Blvd.
Sierra Madre, CA 91024

(626) 355-7135