Risk management

Automobile liability insurance

Contractor shall obtain, at contractor’s expense, and keep in effect during the term of this contract, automobile liability insurance covering contractor’s business use including coverage for all owned, non-owned, or hired vehicles with a combined single limit of not less than $___________ for bodily injury and property damage.  This coverage may be written in combination with the commercial general liability insurance (with separate limits for commercial general liability and automobile liability).

Use whenever contracted work requires the use of a licensed vehicle on public roads, or on your property. This includes driving to and from (including rare to occasional driving such as to meetings), parking and using contractor´s vehicles at work site.

Use whenever contractor transports mobile equipment to the work site. (CGL insurance does not cover the transport of mobile equipment.) Ensure automobile liability includes coverage for owned, non-owned or hired vehicles. Require CGL coverage for the liability exposure arising from the contractor´s operation of the mobile equipment. Note: Mobile equipment is not considered to be an automobile, therefore an automobile liability policy provides no coverage for the operation of this equipment.

Do not require if contract performance involves no driving at all (NOTE: It is rare for contracted work to involve no driving at all.  For example, there may be occasional planning meetings the contractor must drive to).

Use of personal automobile insurance instead of commercial business automobile insurance may be appropriate for sole proprietors. Note: The sole proprietor must either carry a business use endorsement or insure that business use is covered under their personal auto policy.

If contractor transports hazardous substances, waste, and/or materials require pollution liability coverage.

Goods with no services: Here is some guidance related to shipment of the good and if automobile liability insurance should be requested 

    • If the contractor is responsible for shipping the good(s) and we do not take ownership/title of the good(s) until it is received, and the contractor uses an outside delivery company/motor carrier to deliver the good(s), we do not need to request auto liability or motor carrier cargo liability related to shipment of the good(s).  The contractor remains responsible for the good(s).  If the good(s) is damaged during shipping, we will still hold the contractor responsible for the good(s).

    • If the contractor will be shipping the good(s) on their own truck/vehicle, required coverage will include auto liability and motor carrier cargo liability (regardless of when we take ownership/title of the good(s)). 

    • If we will be using our own state employees and vehicle to pick-up and deliver the good(s), we do not need to request auto liability or motor carrier liability related to shipment of the good(s).

    • If we are responsible to arrange/provide shipping of the good(s) and will be using an outside delivery company, a services contract should be put in place with that outside delivery company that will include, among other things, auto liability and motor carrier cargo liability.

Defends and pays contractor’s liability for property damage and bodily injury to others while operating owned, non-owned, and hired vehicles.

Ensure automobile liability includes coverage for owned, non-owned or hired vehicles.  If an employee of the contractor is using their personal vehicle for business use then that employee’s auto liability insurance is primary, but the contractor’s auto liability insurance for non-owned and hired vehicles will cover short comings of their employee’s auto liability insurance if the employee is uninsured or underinsured.

Use the Risk Assessment tool to assess the risks of the particular contract to determine appropriate insurance limits and risk control measures. Ask questions, such as, but not limited to: Will the contractor transport groups of people for the state; use vehicles or carry cargo that could make an accident severe; have multiple vehicles on the road at any given time; travel out-of-state to do contract work; or bring heavy equipment or trucks onto your property? Will driving be only a small part of the contractual activities? Is there little or no chance that the state could be held responsible for the contractor´s actions while driving?​