Insurance Guidelines for Contractors

Insurance Guidelines for Contractors, Service Providers and Vendors

• 1. What are the Fund’s basic insurance guidelines for contractors, service providers or vendors that do business with my center?

  Any company that does business with the center should have General Liability (GL), Automobile Liability (AL), and Workers’ Compensation (WC) coverage at a minimum. Recommended minimum Limits of Liability are:

  General Liability –

  $1,000,000 occurrence, $2,000,000 aggregate for premises/operations
  $1,000,000 occurrence, $2,000,000 aggregate for products/completed operations

  Automobile Liability –

  $1,000,000 combined single limit for bodily injury and property damage, hired and non-owned autos included

  Workers’ Compensation – provides unlimited medical coverage and statutory benefits for time lost from work for employees injured on the job. The policy will also include Employer’s Liability for actions against the employer which do not fall under the statute. Actions for loss of consortium, consequential injury or third party actions come under Employer’s Liability.

  Employer’s Liability Limits

  $500,000 per occurrence bodily injury
  $500,000 per occurrence bodily injury by disease
  $500,000 policy limit for bodily injury by disease
  (Note: These are Employer’s Liability limits and do not affect the payment of medical expenses or lost wages to injured employees.)

• 2. What special provisions should be part of the coverages to help protect the center?

  An “additional insured” endorsement naming the center should be added to the contractor or service provider’s General Liability and Automobile Liability policies.

  A “waiver of subrogation” endorsement in favor of the center should be added to the contractor or service provider’s Workers’ Compensation, General Liability, and Automobile Liability policies.

  For long term contracts renewable on an annual basis or large construction projects we like to see an endorsement to all policies that will give the center notice if the contractor’s insurance is canceled or non-renewed.

• 3. Are there situations that call for different limits or liability than the recommended limits shown above?

  For particularly hazardous operations, large contracts and projects like a multi-million dollar building higher liability limits should be requested. Double the limits of liability shown above and request an Umbrella Liability policy to add $1 to $5 million limits above all of the GL, AL and WC limits.

  For small, ordinary, routine contracts with small companies or individuals, an exception for lower limits of liability can be made.  This is a judgment call and should be carefully vetted.

• 4. Should we request a certificate of insurance from the contractor or service provider?

  Yes, but the certificate does not confer any coverage on the center or guarantee conformity with your insurance requirements. Only the contractor’s insurance policies can do that. The certificate is usually an accurate reflection of the policies, but if there is any doubt the center should request copies of the policies.

• 5. Should we require Workers’ Compensation coverage for everyone who does business with the center?

  It is a very good idea to require it because it protects the contractor’s employees and would prevent them from trying to collect benefits from the center if they are injured on the job. In fact, Texas law requires contractors performing construction work for public entities like the center to carry workers’ compensation. However, sole proprietors, partners, and executive officers are not required to cover themselves. If a certificate of insurance showing workers’ compensation coverage is not in your files, workers’ compensation payroll auditors will charge the center for workers’ compensation contributions for the amount of the contract unless the payroll portion is broken out in your records.

• 6. What other kinds of insurance should we request from the various kinds of contractors, service providers and vendors we do business with?

  The following chart lists various trades, services, and professions and the additional coverages they should carry to protect the center, your consumers, and the public. All of them should carry the GL, AL and WC coverages and endorsements recommended above plus the coverages and special provisions shown here:

  • Medical Doctors, Psychiatrists – if the doctor is an independent contractor he or she must have medical malpractice coverage. Only employed psychiatrists or physicians are covered by the center’s professional liability (malpractice).
  • Other Medical Providers including nurses, physician assistants, technologists – as above, if they are independent contractors or work for a clinic they should have professional liability coverage.
  • Medical Clinics in an associative relationship with the center for integrated care – separate coverage for GL, AL, WC, and Medical Malpractice.
  • Physical Therapists, Speech Therapists, Occupational Therapists as independent contractors should have their own professional liability insurance.
  • Pharmacies – complete business coverage as above including professional liability.
  • Professionals such as accountants, attorneys, architects, and engineers – professional liability, also may be called errors and omissions insurance.
  • Computer consultants, programmers, software providers, offsite server, and file back-up services – Cyber Liability with $1,000,000 occurrence, $2,000,000 aggregate limits covering data breaches, infringement of intellectual property, trademark or copyright, invasion of privacy, information theft, damage to or destruction of electronic data, extortion, and network security. The coverage should include breach response, regulatory fines and penalties, and communications with credit monitoring for individuals whose data has been breached.
  • Contracted operators of group homes, day hab facilities, sheltered workshops, respite centers, and other contracted facilities should carry the limits and coverages specified above for contractors.
  • Hot Line operators should carry all coverages described above plus professional liability.
• 7. What other types of businesses and services should have insurance requirements?

  Any business that comes on center premises to perform work, repairs, maintenance, or services should have the coverages and limits of liability described in #1 above. This includes janitorial services, landscaping, air conditioning, electricians, plumbers, painters, caterers, and security firms.

• 8. Are there any specific requirements for large remodeling or new construction projects?

  Large construction projects definitely call for higher limits of liability as described in question #3. The GL of the contractor should be endorsed to provide “per project aggregate limits” so that large claims on other projects do not exhaust the limits of liability that protect the center on its project. Another common coverage provided by general contractors is Builder’s Risk. This policy provides an “all-risk” type coverage for the value of a building as it is being constructed. If a $10,000,000 building is 50% complete and it is destroyed, the Builder’s Risk would pay for the value of the building at that point. The policy should also cover building materials in storage or in transit before the materials have been used in the construction. The contractor should also maintain their “completed operations” coverage in place for at least two years after the completion of the project. This coverage pays for bodily injury or property damage that is caused by the completed work itself after the job is completed. The defective work is not covered.

• 9. What about insurance for foster parents and family member who provide respite or personal care for center clients?

  Foster parents should carry personal automobile liability coverage with at least the State of Texas minimum limits. They should also carry a homeowners or tenant homeowner’s policy with a liability limit of $100,000.