1 1 These materials have been prepared by the CASBO San Diego- Imperial Section Purchasing...

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BONDS, INSURANCE & STOP PAYMENT NOTICES

These materials have been prepared by the CASBO San Diego- Imperial Section Purchasing Professional Council (or CASBO Associate Member). They have not been reviewed by State CASBO for approval, so therefore are not an official statement of CASBO

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CASBO FALL CLASSIC WORKSHOP:

BONDS, INSURANCE & STOP PAYMENT NOTICES

Long Beach, CAApril 5, 2013

Presented by:Gretchen M. Shipley; Fagen, Friedman, & FulfrostGuiselle Carreon, Director of Purchasing, Grossmont Union High School District

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AGENDA

Bonding

Insurance

Stop Payment Notices

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BONDING

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BONDING

Basics Types

Bid Payment Performance

Purpose Essential elements

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BONDING

Surety Admitted Surety Insurer as defined in

CCP § 995.120 A.M. Best rated A- or better A.M. Best Financial Size Category VII or

better Reject bonds issued by a

surety who does not meet or exceed these criteria.

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BONDING

So this just happened to your construction project…

…what do you do?

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BONDING

Process of Enforcing Bonds Contract unable or

unwilling to contract Contractor’s material

breach Dealing with the

contractor Bankruptcy Approval from surety

Notice of termination to contractor

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BONDING

Bonds claims process Notice of tender to surety Likelihood of takeover Retention of completion

contractor Takeover agreement

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INSURANCE

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INSURANCE

Different types Worker’s Compensation Employers Liability Commercial General Liability

Includes coverage for bodily injury, death, property damage and motor vehicle liability

Builders Risk

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INSURANCE

Determining limits: assessed risk / tiered

Construction agreement should list minimum coverage amounts for each policy of insurance required

Construction agreement should also list subcontractor insurance requirements

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INSURANCE

Owner Controlled Insurance Program (“OCIP”)

Government Code section 4420.5

School districts exempt from $50,000,000 project cost threshold

Implementation Required determination Considerations

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INSURANCE

Owner Controlled Insurance Program (“OCIP”) Completed operation coverage insurance Bid specifications Additional insurance coverage & surety

insurance Developing safety requirements Collective bargaining agreements

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“POP QUIZ, HOTSHOT”Which of the following is not one of the factors that must be considered when implementing an OCIP program:

A. Serious and willful workers compensation violations

B. Number of workplace complaints to Cal/OSHA during the past 5 years

C. Workers’ compensation experience modification factor

D. Injury prevention programs

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STOP PAYMENT NOTICES

Definition Elements of a valid stop payment

notice 20 day preliminary notice Contents Timely filed

How much to withhold? For how long? Lawsuit

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STOP PAYMENT NOTICES How much to withhold?

125% For how long?

Unconditional release/withdrawal

Release bond Failure to file a

counteraffidavit Failure to timely commence

an action Lawsuit to enforce dismissed

Lawsuit

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STOP PAYMENT NOTICES

Lawsuit Timing Service on the public

entity

Tender a defense

Stay away!

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SB 189

Effect “Public Works Contract” Period for Recording Notice of

Completion Completion of a Public Work of

Improvement Stop Payment Notice Fee New & Standardized Service

Requirements

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Q & A

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THANK YOU!

Guiselle Carreon: carreon.guiselle@gmail.com

Gretchen Shipley: gshipley@fagenfriedman.com