September 2009
DHCR requires that all sub-grantees and their subcontractors carry Pollution Occurence Insurance (POI). If the sub-grantee or sub-contractor does not have POI, they must defer all work that may bring them in contact with lead paint or dust until they have secured the proper insurance. Heating System Contractors working exclusively on boilers are not required to have POI.
NYSWDA has obtained a quite that gives sub-contractors the ability to obtain this coverage at the same price as agencies.
NOTE:Sub-contractors are required to follow New York's Lead Safe Weatherization Practices and have their staff certified by attending the 1-day Department of Energy approved, Lead Safe Weatherization Course. NYSWDA will be providing this training on an ongoing schedule.
Coverage
NYSWDA ISU Insurance Services offers a pollution policy underwritten by American Safety Services excluding mold with $500,000 limits and a $2,500 deductible. The policy is claims-made which means the policy will have a retro-active date. Work after the retro-active date will be insured. For future renewals going forward, the retro-active date should not change even if insurance companies do.
Underwriting
The weatherization application should be completed to the best of you understanding. The application is oriented towards local agencies but applies to private contractors as well. The documents required at the time of binding are:
Any initial questions, should be directed to Randi Smith - (518) 690-0494 or randi@nyswda.org
Contact information for ISU Insurance Services:
Gail McElheny - gail@environmentalinsurance.com
ISU Insurance Services
1037 Suncast Lane, Ste. 103
El Dorado Hills, CA 95762
P: (916) 939-1080
F: (916) 939-1085
Professional Coverage / Local Agencies
Local agencies that utilize private contractors for the weatherization in-house work but provide "oversight" or "project management" to the private contractor can purchase either incidental professional liability or full professional liability coverage. Minimum premiums would be $3,200 to $4,000. An application other than the weatherization application above would be required. Please request documents from Gail McElheny at ISU Insurance Services - gail@environmentalinsurance.com
This is for agencies that want to name their sub-contractors on their policy
What are the basic limits of coverage?
The policy has three basisc limits - $500,000 per occurrence; $500,000 aggregate for the policy term; and $2,500 deductible per occurence. Any of these limits can be rasied. If the occurence and aggregate limits are increased, the premium will increase. If the deductible is increased, the premium may decrease depending on the policy coverage amount.
Are these limits of coverage adequate?
The issue of limits of coverage is very perplexing. The amount of coverage is one feature of a policy that dictates premium amounts. Levels of coverage can be increased and the premium will reflect that increase as well. On the application, there is an option to have higher limits set on individual policies. One of the main discussion points during negotations was that WAP's exposure is so limited and our time spent in a home so short, and the scope of our work so directed to non-invasive activites, that large limits would not be useful or practical. If WAP was performing kitchen and bathroom demolition, removing walls, ceilings and floors, or other remodeling activites, these levels would not be adequate. Our exposure and liability would increase dramatically and our limits would also need to increase accordingly. If local agencies or contractors are uncomfortable with these lower limits, it is strongly recommended that they request higher ones on the application.
Does the limit of coverage include legal fees?
The "defense fund" is inside the aggregate for the policy. Any agency may purchase "First Dollar" coverage; however, this was not negotiated as part of this procedure and would have an additional cost to the agency.
Who is responsible for paying the deductible?
The Retention Fund, or deductible amount, is usually a cost paid by the isured party. Using WAP funds to pay for the deductible may be allowed, especially in lieu of A-122 text regarding costs that states:
"Reasonable cost. A cost is reasonable if, in its nature or amount, it does not exceed that whcih would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. The question of the reasonableness of specific costs must scrutinized with particular care in connection with organizations or seperate divisions thereof which receive the preponderance of their support from the awards made by Federal agencies. In determining the reasonableness of given cost, consideration shall be given to:
What will the policy cost?
The cost will depend on the volume of work being performed by the local agency or contractor. The cost is based on a minimum amount (believed to be approximately $2700). Additional premium costs are added based on volume of work. The actual premium amounts will be determined through the underwriting process of the insurance company.
Will this policy cover all WAP activity?
Yes. This policy covers all weatherization activity regardless of the funding source.
Will the policy cover rehabilitation work performed by the crew or contractor?
No. this policy covers only WAP related work being performed under and agreement with a funding source to perform such work on their behalf.
Is this lead paint insurance?
No. We opted for POI rather than lead insurance because of the type of work being performed in WAP. It is not the intent of the crews performing Weatherization to identify or disturb surfaces that may contain lead-based paint. In fact, our crews are trained to handle these situations in a safe manner to reduce or eliminate any lead dust distribution. Lead insurance is for those companies doing demolition or rehabilitation work where surface disturbance is unavoidable. Personnel performing this type of work must have lead technician, supervision, and/or risk assessment training and certification. And of cource, the premium cost for these policies is extremely high - $10,000 to $20,000.
Is this a "claim made" or an "occurrence" policy?
An occurrence policy states that any legitimate claim brough against the insured will be honored at any time provided the work occurred during the time when the policy was in effect. These policies are more expensive since reserves must be held by the company to cover any future losses from the future claims. Claims made policies allow for claims to be paid during the current year rather than holding reserves for each year of past coverage. These policies are usually less expensive; however, when terminated, the subsequent company may require an additional premium to cover possible current year claims from previous year's work. This POI coverage is offered in a "claims made" form.
How do I calculate the volume of work?
The volume of WAP work is determined by your contract. It should reflect those dollars that are directly attributed to the work being performed and should exclude administration, technical assistance, or other funds earmarked for services other than direct material application on homes. Energy audit activity and quality control inspections may be exluded, depending on the nature of the protocols practiced on site by assigned personnel.
Should private contractors purchase their own policy?
This is an ongoing debate that must be settled locally. Many local agencies using private contractors to perform WAP services will pass all liability requirements to these companies, thereby protecting the agency from any liability claims. Thos means that each contractor will purchase a POI policy. Unfortunately, this also means that several minimum premium payments will be made. Tere are some local agencies who may be willing to accept the liability of their contractors and purchase the policy themselves. The cost of the insurance is dramatically reduced since only one minimum premium payment is made but the exposure for the agency is increased. It could mean that ant mistakes made by the contractor in the area of pollution control becomes the reponsibility of the local agency. Each agency should get a legal opinion regarding the best course to take implementing POI coverage.
Does the policy cover mold and mildew?
No. Mold and mildew is excluded from the policy. It can be included; however it could double the cost of the policy. Since it is not a requirement of the WAP as yet, it was eliminated from negotiations.