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Additional Information
Aircraft Liability
  • Aircraft Liability has a medical coverage option . If chosen, this pays regardless of fault. There is no deductible. It is intended to pay medical, surgical, hospital and funeral expenses up to the applicable limit for occupants of the airplane. Crewmembers may be included in this coverage.  
  • Unlike many other forms of insurance, most aviation insurance is negotiated. The price for the contractor´s premium isn´t read off a chart. It is a rate arranged through a broker and underwriter. Insurance coverage is underwritten based on many guidelines, including but not limited to, claims experience, financial stability, length of time in business, length of time with current insurer, etc.
  • Helicopter insurance is more expensive than fixed-wing aircraft insurance. Helicopters represent only about 8% of the worldwide general aviation fleet, making it difficult for underwriters to "spread the risk." Also, helicopters statistically present a higher number of accidents and fatalities per flight hour than the general aviation fleet as a whole. As a result, a higher premium is required to cover the expected losses from this market segment. Helicopters operate in a unique environment (low altitude VFR with birds, wires and poles), are often used for hazardous missions (law enforcement, news gathering, sling loading) and, arguable, have a greater propensity for human error due to maintenance and flight proficiency issues. 

A surety company will assess the contractor´s entire business operation, checking for adequate financial resources, necessary experience, organization, existing work load and its profitability, and management skills to carry on the business and successfully complete the project for which the bond is required. When it issues a bond, the surety company has verified that the contractor is capable of performing the job. The contractor´s premium is based upon this assessment of loss experience, assets and finances. 
The surety company has obligations to both the owner, i.e., the state, and the contractor. If the contractor and owner disagree on contract performance issues and the owner declares the contractor in default, the surety must investigate the claim. The surety has several alternatives for response should the contractor be in default:
  • Finance the original contractor or provide support necessary to allow the contractor to finish the project; 
  • Arrange for a new contractor to complete the contract;
  • Assume the role of the contractor and subcontract out the remaining work to be completed; or 
  • Pay the penal sum of the bond.  Note: The amount in which a bond is issued is the "penal sum" or the "penalty amount" of the bond.      
The surety company determines its response. Ultimately, it will seek full reimbursement from the contractor. 

Builders' Risk

Commercial General Liability

Indemnity/Hold Harmless Clause
  • Indemnity/Hold Harmless clauses are a type of non-insurance transfer of liability to another party. However, the protection provided under these clauses, without insurance, is only as reliable as the assets of the entity backing up the statement. Therefore, before waiving insurance coverage requirements, carefully consider the chance of something going wrong related to the contract services or activities. 
  • The hold harmless clause transfers the responsibility or liability of any claim arising out of contracted services to the contractor. The indemnification clause transfers the financial costs associated with the loss.
  • Do not indemnify an independent contractor. The state is subject to the Oregon Tort Claims Act (OTCA), ORS 30.260 to 30.300.  The OTCA limits the state´s liability exposure. Independent contractors have unlimited liability. Indemnifying an independent contractor may make the state subject to unlimited liability.
  • Consult with your AG Counsel for additional indemnification clauses, or prior to changing template indemnity clauses.

Insurance Terminology
For example, some contracts that the state enters into require that the state name a vehicle or equipment owner as loss payee. This means that if the state damages or destroys the rented or leased equipment, the owner, not the state will get the money to repair the property. 

Marine Insurance
A vessel is considered to be "in navigation" when it is engaged as an instrument of commerce or in transportation on navigable waters. The term is construed liberally. Consequently, vessels which are in port or under repair are still considered "in navigation" as are certain vessels which are stationary, moored, or fixed in place. For example, a jack-up drilling rig on location is still considered to be "in navigation" even though it is not moving. However, a vessel which is under construction and still undergoing sea trials is not yet "in navigation" for Jones Act purposes. 

OCP Liability
Owners and Contractors Protective (OCP) Liability
Usually vicarious liability stems from injury or damage caused by an employee under a strict employer-employee relationship; but under certain circumstances the liability exposure of acts of non-employees, such as independent contractors, may be attributed to the project owner, i.e., State of Oregon. The circumstances fall into three categories:
  1. work that is inherently dangerous;
  2. projects that impose non-delegable duties on the project owner under local, state or federal law; and
  3. negligence of the project owner in hiring an incompetent contractor.
The State of Oregon has other alternatives when covering its vicarious liability. Other alternatives are to have the contractor hold the state harmless for losses arising out of the contractor´s operations or to have the contractor add the state as an additional insured under the contractor´s CGL policy.

Professional Liability
  • Coverage - The coverage in a Professional Liability Policy pays for damages. These are damages that the insured becomes legally obligated to pay because of injury to another person. For the coverage to apply, this injury must be the result of a "wrongful act." A "wrongful act" means any act, error, or omission in the furnishing of the type of professional services that the policy was intended to cover.
  • Exclusions - Professional Liability insurance doesn´t cover the Contractor if they don´t perform the duties of the contract, or don´t perform them correctly. The exception is if the professional makes an error or omission in their decisions.
  • Limitations - Professional Liability Coverage generally limits certain types of exposures or losses. These reduced limits are called sub-limits. Examples of the types of exposures that have a sub-limit include allegations of sexual misconduct and corporal punishment. Often a Professional Liability Policy will have a limit of $1 million with a sub-limit of $25,000 for sexual misconduct. 

Document Date
January 2004