How to Manage Risk and Stay out of Trouble on Capital

Investment Projects

Risk Management and Insurance

Charles W. Miller III, Esq.

Norris, McLaughlin & Marcus

Risk Management

“It’s Not Rocket Science…It’s Much More Complicated.”

Risk Management Process

1. Recognition of Risk

2. Risk Assessment

3. Developing Strategies to Manage Risk

4. Mitigation of Risk

Risk Management

1. Risk Control – limiting risk exposures.

2. Risk Financing – limiting payment due to risk exposures.

Construction-related Insurance

• Builders Risk Insurance – Building coverage during the course of construction.

• Commercial General Liability (CGL) Insurance – Third-party liability coverage.

• Excess/Umbrella Liability Insurance – Broader/higher coverage for excess claims.

Construction-related Insurance

• Workers Compensation Insurance – Employee injuries at work.

Construction-related Insurance

• Pollution Insurance – – Excluded in CGL coverage.

Construction-related Insurance

• Professional Liability Insurance – Design and construction professionals.

– Project-Specific Professional Liability

– Owner’s Protective Professional Indemnity

Construction-related Insurance

• Subcontractor Default Insurance/Subguard

Construction-related Insurance

• Controlled Insurance Plan or “Wrap-up” Insurance –

Comprehensive insurance program for all project participants.

Certificate of Insurance vs. Additional Insured

Certificate of Insurance does not establish insurance coverage.

Statute of Repose vs. Statute of Limitation

• Statute of Repose – begins at period following completion of services.

• Statute of Limitations – begins at date of injury or discovery.

Example

Night Watchman

Worker’s Compensation

Joe Smith - Neighbor

• Commercial General Liability

• Umbrella

Electrical Switchgear

• Builders Risk

Delayed Completion

• Business Income/Rental Income Loss under Builders Risk Policy

Contaminated Soil

• Pollution