An Administrator's Guide to California Private School Law

Chapter 17 – Construction

Ratings, Inc. A school may also obtain financial reports regarding an insurance company. Standard & Poor’s Insurance Rating and Dun & Bradstreet provide these reports for a set price.

Schools may require its contractor’s insurance company have an A.M. Best’s rating of no less than a certain level, such as A:VII. The better the rating and financial stability of an insurance company, the greater the assurance, although there are no guarantees, that an insurance company will be able to meet the obligations on its policies. Requiring a higher-rated insurance company may, however, eliminate small to mid-size contractors who are unable to afford insurance from a higher-rated insurance company. The school should evaluate these risks and benefits when setting the insurance requirements in the contract documents.

LCW Practice Advisor

 Certificate of Liability Insurance as Proof of Insurance. A Certificate of Liability Insurance is not effective unless signed by an authorized representative of the issuing company. Some certificates state that the insurance certificate does not bind the insurance company if it differs from the policy itself. The school should request that this statement be removed, or that the architect, construction manager, or contractor provide other proof of insurance.  Policy Limits. To reduce the amount of premium that a contractor pays, it may obtain insurance for policy limits less than the amounts required by the contract documents. Upon receipt of proof of insurance, the school should make sure that the contractor obtained the correct amount of coverage.  Policy Period. Insurance policies are generally issued for a period of one year. The school should make sure that the insurance policies obtained by the contractor cover the entire period during which work will be performed on the project. If the work will extend beyond the period specified in the policy, the school should request that the insurance company extend the policy period to reflect the duration of the project, or make sure that the contractor renews the policy or obtains a new policy to cover any additional time until completion of the project.  Additional Insured Endorsement. Contract documents generally require that the school, its board, directors, officers, trustees, employees, and agents, including its architect and construction manager when applicable, be named as additional insured on the CGL, Automobile Liability, and other policies. The school should make sure that this requirement is reflected on the policy, generally in the form of a separate document titled “Additional Insured Endorsement.” In evaluating the Additional Insured Endorsement, the

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