Insurance Coverage Requirements
General Liability Insurance:
 General Liability insurance provides protection for bodily injury and property damage
claims arising from all locations and operations of the municipal or quasi-municipal
entity as defined in the IRFFNC coverage form caused by the named insured
 Most contracts presented to you from a third party should state the occurrence and
aggregate limit requirements.
Example: Coverage shall have minimum limits of $2,000,000 for general aggregate,
products/completed operations aggregate, personal and advertising injury and each
occurrence. Coverage shall be written on an occurrence basis.
 The IRFFNC General Liability policy does not contain a general aggregate (cap on the
most that can be paid out in a year). In other words the general aggregate for general
liability is unlimited.
 You should require all contractors to carry general liability insurance with limits of at
least $1,000,000. and preferably limits to match your own if more than $1,000,000. The
contractors should add you as an Additional Insured.
Auto Liability Insurance:
 Auto Liability insurance provides protection for bodily injury and property damage
caused by an accident arising from the operation of a covered vehicle that the insured is
legally obligated to pay.
 Most contracts presented to you from a third party should state the occurrence limit
requirement.
Example: Coverage shall have minimum limits of $2,000,000 per occurrence, combined
single limit for bodily injury liability and property damage liability. This shall include
owned vehicles, hired and non-owned vehicles and employee non-ownership.
 You should require all parties that provide a service involving an automobile to carry
auto liability insurance on their vehicles. Examples include street sweepers, contractors
using heavy vehicles, garbage collection, tow trucks on rotation, etc.
Auto Physical Damage (Comp and Collision):
 Auto physical damage insurance covers property damage to covered vehicles.
 This coverage is usually required from banks for leased or financed autos.
Worker’s Compensation and Employers Liability Insurance:
 Workers compensation provides compensation for medical care for employees who are
injured in the course of employment, in exchange for mandatory relinquishment of the
employee's right to sue his or her employer for the tort of negligence.
 Employers liability is an insurance policy that protects employers from liabilities arising
from disease, fatality, or injury to employees resulting from workplace conditions or
practices.
 Most contracts presented to you from a third party should state the required coverage.
Example: Coverage to apply for all employees for statutory limits in compliance with the
applicable state and federal laws. The policy must include employer’s liability with a limit
of $100,000 each accident; $500,000 bodily injury by disease each employee and
$500,000 bodily injury by disease policy limit.
 You should require all contractors to carry workers compensation coverage. Statute
only requires employers with 3 or more part- or full-time employees to carry workers
compensation coverage. We recommend that you require that all contractors carry
workers compensation coverage even if they have less than 3 employees.
Property Coverage:
 Building and Personal Property coverage applies to physical damage to buildings,
contents and other structures listed on the property schedule.
 Most contracts presented to you from a third party should state the required coverage.
Example: City agrees to maintain insurance coverage for property damage on the
structures listed within this contract.
 The IRFFNC Building and Personal Property coverage form does not cover underground
piping (outside the fenced area of a treatment plant). Some banks will issue contracts in
conjunction with a loan that requires the city or town to insure the underground piping
but banks will often waive this requirement.
 You should require all tenants of your buildings to maintain property coverage for their
own contents.
Builders Risk Coverage:
 Builder’s Risk Insurance provides coverage for building and other structures under
construction. Typically, this insurance will also cover building materials stored at the
construction site, materials in transit and materials stored at a temporary site.
 Most contracts presented to you from a third party should state the required coverage.
Example: Owner agrees to maintain builder’s risk insurance coverage for property
damage for the structures under construction listed within this contract.
 You should require that the builder purchase and maintain the builder’s risk for
construction contracts. This may increase the bid amount for construction projects, but
this coverage is easier for the builder to obtain since the builder is actually doing the
work. IRFFNC cannot provide builder’s risk coverage for new construction projects.
Pollution Coverage:
 Pollution Insurance provides coverage for liability claims due to pollution of the air,
water or land.
 Most contracts presented to you from a third party should state the occurrence and
aggregate limit requirements.
Example: Pollution Coverage shall have minimum limits of $2,000,000 for general
aggregate and each occurrence.
You should require pollution coverage of any contractor performing the following work:
a) Lead removal or abatement
b) Asbestos removal or abatement
c) Mold removal
d) Underground storage tank removal
e) Any pollution cleanup project
Railroad Protective Liability Coverage:
 Railroad Protective liability coverage is a protective liability coverage written in favor of
a railroad on behalf of those who are conducting operations on or adjacent to railroad
property.
 Most contracts from railroads will state what coverage is required of you.
Q: What requirements do RR contracts typically include?
When a Railroad grants permission to a town for access to their right-of-way, the town will usually be
required to sign a contract –
You will have ‘to indemnify and hold the railroad harmless’ for any claims arising out of or in
connection with the work on or near the railroad
The railroad will ask that you provide them with a Certificate of Insurance showing that you
have General Liability coverage usually with a limit of $3,000,000 naming the RR as an additional
insured
If you are using a contractor to perform the work, the Contractor will also have to provide a
Certificate of Insurance with $3,000,000 limits
You will also be required to provide the RR with a “Railroad Protective Liability Insurance Policy”
Q: Does my IRFFNC Policy satisfy these requirements?
Although the IRFFNC General Liability coverage offers protection to the Municipality for their
exposure the policy contains an exclusion for assumption of liability for the railroad under ….a
contract that indemnifies any person or organization against ‘bodily injury’ or ‘property damage’
arising out of construction or demolition operation within 50 feet of any railroad property…. (see
General Liability coverage document Section V – Definitions, #11 Insured Contract, paragraph f.
(1) for complete wording )
If you don’t have a $3,000,000. General Liability limit we can increase your limit upon your
request or you can try to negotiate a lower limit with the railroad. Note: Increased coverage
will have to remain at this higher limit until the RR releases you from the contract. We will
provide the necessary certificate for you - however, the Certificate of Insurance in no way
broadens or changes your coverage.
We recommend that you contract the job to a reputable contractor, requiring that they “hold
you harmless”. You should be named as an additional insured on the contractor’s General
Liability policy. No work should begin until you and the RR are satisfied with the contractor’s
certificate. The contractor should provide you with a signed General Liability insurance
certificate, with same limits as required by the RR or higher. Check the limits and coverage
carefully. The Liability policy should be written on an ISO form of 1993 or newer. (The newer
form allows the contractor to hold harmless the Municipality, even if the job involves
construction within 50 feet of a railroad).
IRFFNC does not sell Railroad Protective Liability. Railroad Protective does what the name
implies – it protects the railroad. It is purchased by you in the name of the railroad and the
railroad is the named insured. Since Railroad Protective Liability is very expensive the RR
usually has a Master Railroad Protective policy and can add your specific project to their master
policy for a fee. We strongly recommend that you do this. * If this option is unavailable –
please call and we will provide you with the name of an agent who can quote the coverage for
you.
NOTE: You should, as always, have the town’s attorney review the RR contract and carefully scrutinize
the Hold Harmless and Indemnification clauses. If a disproportionate amount of the risk is being placed
on the town you should try to negotiate a more fair allocation of the risk
Owners and Contractors Protective Coverage:
 Owners and Contractors Protective coverage (OCP) is a policy which protects an insured
against losses caused by the negligence of a contractor or subcontractor that he hires.
Provides protection for “inherently dangerous, non-delegable duties”
 You should require OCP coverage of any contractor performing the following work:
a) Trenching and shoring
b) Blasting
Errors and Omissions Liability Coverage:
 Errors and Omissions coverage (E&O) is a form of insurance that indemnifies the insured
for any loss sustained because of an error or oversight on their part.
 You should require all engineers and architects to maintain E&O coverage for the design
work they provide to you.
Umbrella Liability Coverage:
 Umbrella liability is a coverage basically affording high limit coverage in excess of the
limits of the primary policies as well as additional liability coverages. The term "umbrella"
is derived from the fact that it is a separate policy over and above any other basic Liability
policies the insured may have.
 Most insurance carriers only provide $1,000,000 of underlying general liability and auto
liability coverage. They use an umbrella or excess policy to provide limits greater than
$1,000,000. For example, if the general liability requirement is $4,000,000, then the
general liability policy will provide the first million of coverage and the umbrella will
provide the other three million.
 IRFFNC does not have an umbrella insurance product. We increase the underlying
coverages like general liability, auto liability, police professional, and public official’s
liability upwards to a maximum limit of $5,000,000.
 Your requirements for umbrella coverage from others will depend on the limits
requested in your contract. If your contract requires a contractor to carry $3,000,000 of
general liability coverage, their certificate will probably show a $1,000,000 general
liability limit and a $2 million umbrella limit.