Liability Group Presents - Construction Liability All Risk -
Project Policy as a DIC/DIL Wrap to a Construction All Risk Policy -
Creating a Competitive Advantage
AIG's Liability All Risk - Project ("LARS") Policy has been developed as a standalone product with a Liability section that provides coverage that is broader than most standard forms available in the market. LAR is a modular form and can extend coverage for Crisis Containment and Environment Impairment Liability under single policy.
In order to meet market expectations and bridge the gap between current buying practice versus future buying practice, we are making our policy available on a Difference In Conditions / Difference in Limits basis to CAR/EAR policiy.
Our policy form on a DIC/DIL basis represents a win-win-win:
- Insured: gets broader coverage than that provided under a CAR policy. This liability cover will extend through their excess liability program.
- Broker: gets to demonstrate to their client that they are bringing broad coverage to them in a cost effective manner (liability cover "included on CAR, often for "free"").
- AIG: gets to lead on the Excess Liability and introduces Environmental and Crisis coverages.
Here below are the FAQ's that would clarify LAR policy Objectives, Intentions and coverages.
- Can coverage be provided for Annual Contractors policies?
This policy was developed specifically for Projects. It is likely that it can be tailored to be an annual policy, but at this stage we are focused on projects only.
- What Limits of Indemnity can we cover under each Section?
Standard profit center guidelines apply: Third Party Liability $100,000,000; Environmental Liability $50,000,000 and Crisis Containment $1,000,000. Our standard offers will likely have lower limits.
- Are Policy Limits aggregated?
Third Party Liability Completed Operations and the Environmental Liability sections both have aggregate limits. These limits apply for the term of the policy.
- How does the Environmental Coverage interact with Pollution Coverage granted under Section 1?
The Third Party Liability section provides Difference in Limits coverage over the Environmental section. If the Environmental Liability limit is lower than the TPL limit, the TPL limit will apply on a DIL basis for S&A coverage; therefore, S&A coverage is always provided for full TPL policy limits. In the event the Environmental section is not purchased, the Third Party Liability section will still provide S&A pollution coverage.
- What are the key coverage benefits of the Environmental Section?
Coverage is afforded for both gradual pollution and on-site clean up (a first party cover) when governmentally required.
- Do we provide Cross Liabilities?
Cross Liability is provided under D. General Provisions, item 4. Multiple Insureds.
- Who can be considered and Insured under the Project Policy?
The Insured can be the General Contractor, Subcontractors and the Principle. The burden is on the underwriter to fully understand the different liabilities of the parties. One must also keep in mind that we provide Multiple Insured (Cross Liability) cover.
- Do we cover the US/Canada?
Coverage is afforded in the USA and Canada for non operational and premises risks, as they should be covered locally. Coverage in the USA is also not covered for manual work. The policy essentially provides trip travel coverage to visit suppliers, financiers, engineers & architects and other parties.
- What does Crisis Containment provide?
Indemnity for Consultant Costs and Extra Expenses that are incurred as a result of a Crisis are covered. The definition of a Crisis is very broad and includes crucial times in the Insured's activities that result in Adverse Publicity or imminent financial loss.
- Does the Policy cover completed operations?
The policy automatically covers completed operations. If you do not want to offer this coverage you must exclude it. An endorsement will be developed.
- What Self Insured Retentions are applicable?
Self Insured Retentions can apply to each section of the policy. Presently the SIR applies to all damages including defense cost. We will likely change the standard wording to have defense cost run outside of the SIR. When that occurs we will also provide an endorsement to allow defense cost to be included within the SIR.
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Issue 15 | March 2008