An Administrator's Guide to California Private School Law

Chapter 17 – Construction

 Property insurance covering the completed structures and buildings following completion of a project or a portion of the project;  Liability coverage for bodily injury, property damage, and other potential liabilities that third parties may sustain arising out of the project;  Fire insurance coverage, if not included in any of the above policies; and  In areas prone to earthquakes, the school should consider obtaining coverage for damage, destruction, or loss of use due to earthquakes.

Contractors may attempt to include contractual requirements that schools must maintain various types of insurance coverage that name the contractor as an insured. If legal counsel and the school’s construction team determine these coverages are unnecessary, schools should attempt to negotiate these unnecessary requirements out of the contract. Even if coverages are necessary, schools do not need to agree to be contractually obligated to maintain coverages or name the contractor as an additional insured.

LCW Practice Advisor

D. E VALUATING S UFFICIENCY O F I NSURANCE C OVERAGE Upon receipt of proof of insurance, the school should review it for compliance with the requirements of the contract documents. Architects, construction managers, and contractors are generally required by the contract documents to provide the school with proof of insurance, usually a copy of the Certificate of Liability Insurance, prior to commencing work. This is typically a one-page document that briefly sets forth the insurance coverage being provided. The Certificate generally will not contain all information necessary to determine the policy’s compliance with the contract requirements. The school may need to request a certified copy of the policy or endorsements for this purpose. When evaluating proof of insurance, the school should consider the following:

 Admitted Status. The California Department of Insurance licenses insurance companies that conduct insurance business in the State of California. Schools should ensure an insurance company is licensed as California has established the California Insurance Guarantee Association to fund claims on policies issued by admitted insurance companies should that entity become insolvent.  Rating and Financial Status. The State of California does not rate or assign ratings to insurance companies. Several private companies do provide ratings for insurance companies. A.M. Best offers the most widely known system of ratings for insurance companies. The ratings are available on its website. Other insurance rating companies include Moody’s Investor’s Service, Standard & Poor’s Insurance Ratings, and Weiss

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 570