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The National Academies

TCRP J-05/Topic 20-02 [Pending]

Liability Insurance Issues for Transit Lawyers: A Primer
[ TCRP J-05 (Legal Aspects of Transit and Intermodal Transportation Programs) ]

  Project Data
Funds: $75,000
Contract Time: 12 months
Staff Responsibility: Gwen Chisholm-Smith

PREAMBLE
The Transit Cooperative Research Program (TCRP) plans to award a contract for a study and report. Legal research reports sponsored by this project are published in TCRP's Legal Research Digest (LRD) series in electronic format. Publications are made available to some libraries and to approximately 4,000 transportation lawyers and officials through the TRB distribution network.
 
BACKGROUND
Many public transit agencies lack in-house staff with risk management and insurance expertise. It frequently falls to the agency's attorney to review, analyze, and provide advice on the type of insurance required by the agency’s contractors. Research is needed to aid public transportation attorneys in responding to legal issues involving risk management and insurance liability.
 
OBJECTIVE
The objective of this project is to produce a primer on insurance issues for transit agencies that may operate bus, rail, paratransit, and other types of transit service. The primer will include best practices regarding the types of insurance that a public transit agency should purchase to ensure it is properly protected, including how to determine the appropriate policy limits, and the appropriate qualifications or ratings for insurance companies.
The primer will address issues related to:
  • The types of insurance to be required of the contractors. This will include insurance that will be required for construction projects (contracts with design professionals and general contractors), P3 projects, purchase of goods and other services, and contracts for private operators. Also, the types of insurance may include liability insurance, which may consist of general commercial liability insurance, vehicular liability insurance, property insurance, workers’ compensation and builder’s risk insurance. 
  • Appropriate language to include in procurement documents and agreements with contractors regarding the policy limits, insurance company ratings, and self-insurance limits. 
  • The types of insurance for agencies that operate interstate service.
  • What should be required in terms of certificates of insurance, including what kind of protection the public transit agency should expect to receive through certificates of insurance and what risks of liability the public transit agency may still have to accept. 
  • What a public transit agency may reasonably request in terms of indemnification from its contractors. The primer should provide sample indemnification language for use by public transit agency attorneys for different types of contractors, including general contractors, consultants and other professionals. Also, sample indemnification language related to what the public transit agency should require in terms of insurance and indemnification from subcontractors should be included.
  • The types of insurance appropriate for smaller projects when the public transit agency wants to encourage participation of Disadvantaged Business Enterprises who may not be able to obtain insurance with larger policy limits.
An outline of the issues to be addressed in the primer follows:
 Purchase of insurance by contractors
   
Types of insurance
General liability-vehicular and general commercial
Property
Workers compensation
Professional liability/malpractice
Errors and omissions
Excess
Policy limits
Insurance company ratings
Self-insurance limits
How does the need to obtain insurance for interstate transit service affect the purchase of liability insurance
How should these insurance requirements be changed for smaller projects where the public transit agency wants to encourage DBE participation
Certificates of insurance
 
 
2. Purchase of insurance by public transit agency
 
Types of insurance
General liability-vehicular and general commercial
Property
Workers compensation
Errors and Omissions
Directors and Officers
Excess
Policy limits
Insurance company ratings
Self-insurance
Limits
Participation in self-insurance pools
 
 
3. Indemnification clauses
    General contractors
    Consultants and professionals
    When the public transit agency is required to indemnify third parties
RESEARCH IMPLEMENTATION
 
This research will be conducted in two (2) phases. Phase I will consist of Task 1. As the conclusion of Phase I, TRB will make a determination whether to proceed with Phase II. Both phases will be pursuant to a firm fixed price agreement.
 
Phase I                        4 months
Phase II                       8 months
Total:                           12 months
 
The tasks will be as follows:
 
Task 1. Research plan and detailed report outline. The consultant will conduct background research and collect relevant material. Based on the initial but complete review of the source material, consultant will propose a detailed report outline. The outline should be at least 8 to12 pages, include a proposed survey if one is to be used, and contain sufficient detail to inform the TCRP project panel of what a 75- to 100-page report will contain. This outline should also contain the estimated pagination for each proposed section and/or subsection. This material will be submitted to TCRP for consideration and approval.
 
Note: Participate in a conference call with the TCRP Legal Oversight Panel approximately 4 weeks after submission of the detailed outline.
 
Task 2. After approval of the work plan, the consultant should conduct additional research, and case and statutory/regulatory analysis.
 
Task 3. Draft report in accordance with the approved work plan (including modifications required by TCRP).
 
Task 4. Revise report as necessary. The consultant should estimate that two revisions will be necessary. One revision may be required after review by the TCRP staff and members of a select subcommittee. Additional revisions may be required after the full committee has reviewed the report.

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