Which of the following liability limits are given in addition to the applicable limits of liability stated in the policy?
Date: May 2021 Members should determine appropriate insurance requirements for independent contractors, vendors and service providers on a case-by-case basis dependent upon various factors, such as the scope of work and the potential risks involved. The following are MCIT’s recommended minimum coverage(s) and liability limits for
independent contractors. The recommendations are not all inclusive and are not mandates by nor requirements of MCIT. The limits shown are not to be construed as adequate coverage. The information is intended to be used as an aid for members in establishing their requirements and does not constitute legal or coverage advice on any specific matter. A member can discuss concerns with its MCIT risk management consultant for specific situations. Consultants can be reached toll-free at
1.866.547.6516. A contractor’s insurance policy has both a per occurrence limit and a general aggregate limit. The per occurrence limit applies to one event. This is the most the insurance company will pay for that one incident. The general aggregate limit is an annual aggregate limit meaning the most the insurance company will pay in claims
for the policy year. Once the general aggregate limit is met, the insurance coverage is exhausted. MCIT recommends members require a general aggregate limit that is at least twice the required per occurrence limit. The required per occurrence limit cannot be met by the general aggregate limit. They are distinct limits, serving different purposes and are not interchangeable. MCIT members have no general aggregate limit. MCIT does not limit the number of liability claims or the total claim dollars paid annually on a member’s behalf. This provides members better coverage than if they had a general aggregate. Insurance Requirements and Liability Limits for Independent ContractorsThe contractor should procure and maintain the following coverages for the duration of the agreement. This is insurance against claims for injuries to persons or damage to property that may arise from or in connection with the performance of the work detailed in the contract that is done by the contractor, its agents, representatives or employees. Commercial General Liability CoverageThe minimum limits of liability should be:
Auto Liability Coverage
Note: Auto coverage should be waived only when the contractor’s work under the agreement clearly does not involve the use of a vehicle on the member’s behalf. Workers’ Compensation and Employer’s Liability Coverage
Professional Liability Coverage
Cyber-liability Coverage
Hold Harmless and Indemnification Agreement
The vendor agrees to defend, indemnify, and hold (Member name), its employees and officials harmless from any claims, demands, actions or causes of action, including reasonable attorney’s fees and expenses arising out of any act or omission on the part of the vendor, or its subcontractors, partners or independent contractors or any of their agents or employees in the performance of or with relation to any of the work or services to be performed or furnished by the vendor or the subcontractors, partners, or independent contractors or any of their agents or employees under the agreement. Additional Insured StatusAdditional insured status is intended to provide extra protection to members in the event of a claim. Additional insured refers to an entity that is covered by the insurance policy of another organization. This status is provided by an endorsement or written amendment to the contractor’s policy. Like primary insurance, additional insured coverage typically provides both defense and indemnity to the additional insured. This protection is owed to the additional insured for a short time even when the contractor has failed to pay the premium. When an insurance company cancels the contractor’s insurance for not paying the premium, the additional insured will likely have coverage for up to 10 days after cancellation. Rules may differ from policy to policy, but most insurance companies offer an additional insured endorsement. Regardless of whether the member is eventually found to be responsible or even partially responsible for a third-party liability claim resulting from the contract or project, the member will likely be involved in a costly and time-consuming claim process. Therefore, MCIT recommends that members require additional insured status with respect to the contractor’s general liability, auto and excess/umbrella policies. Member agreements should require the contractor to name the member as an additional insured on the contractor’s liability policies. Members should obtain a copy of the additional insured endorsement from the contractor’s policy. This is the only way to ensure that the member is an additional insured. Additional insured status is typically not granted under workers’ compensation or professional liability policies. Recommended Additional Coverages: Consider on a Case-by-case BasisPollution LiabilityContractor should maintain pollution liability, covering the contractor’s liability for bodily injury, property damage and environmental damage resulting from pollution and related cleanup costs incurred, all arising out of the work or services to be performed under the contract. Coverage should be provided for both work performed on site, as well as during the transport of hazardous materials. Recommended minimum limits of liability:
The policy must include the member, its officers, agents and employees as additional insureds, but only insofar as operations under the contract are concerned. Builder’s Risk/Installation Floater (Construction Projects)During the term of the contract, the contractor should maintain in force and at its own expense, builder’s risk and/or installation floater insurance that covers labor, materials and equipment to be used for completion of the work performed under the contract. The insurance should cover all risks of direct physical loss at an amount equal to the full value of the contract improvements. Fidelity Bond/Crime InsuranceThe contractor should maintain employee dishonesty and, when applicable, inside/outside money and securities coverages for member-owned property in the care, custody and control of the contractor. Coverage limits should not be less than the amount shown in the contract. Performance/Payment BondA performance or payment bond might be required by statute. A performance bond provides a financial guarantee that the contractor will perform the work specified in the contract within the timeframe noted in the contract. A payment bond provides a financial guarantee that the contractor will pay all costs incurred, avoiding potential liens against the property or project. A best practice is for the member to verify bond issuance directly with the issuing company or agent before relying on the bond. What is total liability limit?Limit of liability refers to the max amount of money your insurer is on the hook for if something bad happens to you, your stuff, or your property.
Which of the following limits in the commercial general liability coverage is not subject to the general aggregate limit?The only circumstances in which the general aggregate limit does not apply is to damages because of bodily injury or property damage arising out of the products-completed operations hazard.
What limits a company's liability to provide insurance coverage?Exclusion. An exclusion is a condition which limits the company's liability to provide coverage.
What is combined single limit liability?A combined single limit policy has one liability limit for all injuries or damage sustained in an accident. Here's how it works: You cause an accident that injures three people and damages the other vehicle. Bodily Injury to the Other Driver.
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