The National Academies

NCHRP 20-06/Topic 20-04 [Final]

Due Diligence for Insurance Coverage in Transportation Construction Contracts
[ NCHRP 20-06 (Legal Problems Arising out of Highway Programs) ]

  Project Data
Funds: $61,500
Research Agency: Parker Corporate Enterprises, Ltd.
Effective Date: 1/2/2014
Completion Date: 5/1/2015
Comments: Completed and Published as NCHRP LRD 66

Federal and State laws and regulations require that contractors provide evidence of insurance for road and bridge construction contracts over specified amounts. The insurance is required to cover general liability, workers compensation, automobile and other risks. The insurance also has required minimum limits of coverage. Each policy typically has exclusions for pollution liability or conditions of force majeure. Most construction contracts specify that the contractor file certificates of insurance showing the contracting agency as an additional named insured as evidence of coverage. This requirement is not enough to protect the contracting agency.

Transportation officials need to know the extent of due diligence required to obtain the value of insurance that is specified. This due diligence will require a review and understanding of underlying insurance policy language. This report will summarize the important issues and troubling language encountered during a review of the underlying policies and provide recommended language and solutions.

The objective of this research was to identify the most prevalent problems encountered in administration of these insurance policies and to illustrate solutions. The research includes a discussion of what contract language and specifications is recommended to protect the contracting agency. A checklist of points, positions, and recommended language to be verified during agency review are also included in the report. The research  identifies resources available to the agency reviewer to assist in explanation of language in insurance policies.

The final report has been completed and published as NCHRP LRD 66.

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