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Title: Recommendation: I recommend that the School Board approve the renewal purchase of an Owners’ Protective Professional Liability Insurance policy with Steadfast, a member of Zurich American, an A+XV Best Rated carrier, to cover architect’s errors or omissions for a three-year term beginning June 1, 2007, through June 1, 2010, at a rate of $2.10 per thousand dollars of hard construction costs, through our broker, Arthur J. Gallagher and Company. Description: · This three-year claims made policy will provide $10,000,000 blanket coverage for damages resulting from wrongful acts, errors or omissions committed by design professionals and will include a seven year extended reporting period (down from 10 years, however the premium remains constant). · This policy would be owned by the District and is excess over a firm’s Architects & Engineers Practice Policy. A $100,000 per claim self-insured retention will apply only in the event the architect’s individual coverage is not available. · The first year insurance costs will be $724,890, based on the estimated construction values of $341,768,073 in calendar year 2007. The premiums will be paid annually based on the projected construction costs for that year. The carrier will conduct an annual audit and adjustments will be based on actual costs. · This policy (our 3rd renewal) will save the District $2.358 million dollars in the first year alone because it eliminates the need for project specific Architect and Engineers insurance which would be a pass through cost.. · Additional deductible options of $500 thousand and $1 million are available. However the premium reductions (6% and 12%) do not justify the substantial per claim retention increases. · This three-year policy will be written net of commission with our broker receiving an annual fee of $20,000 (with commission savings to the District of over $51,000 in year one). · The District has the right to exclude any project from this policy if evidence of other coverage is provided to Steadfast. Financial Impact: The financial impact to the District is a rate of $2.10 per thousand dollars of construction costs plus broker fees of $20,000 per year. The projected premium for the first policy year is $724,890. The source of funds is the corresponding Capital Projects Budget for each project. For Additional Information, contact:
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