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Integration Projects Insurance Cheat Sheet (DRAFT) by [deleted]

Insurance for integration project

This is a draft cheat sheet. It is a work in progress and is not finished yet.


Insurance can make many of a system integr­ator’s problems someone else’s problems. Insurance obliga­tions are part of most system integr­ation project contracts. Engine­ering projects often need multiple types of insurance to have approp­riate coverage.

No company is perfect, which is why most control system integr­ation project contracts include a long paragraph (or 10) of insurance requir­ements. Many of these contracts contain specific types of insurance and policy limits the system integrator must carry during the project (and often for a period of time after system integr­ati­on—or other engine­eri­ng—­con­tract project work is comple­ted), with the system integr­ator's customer included as an "­add­itional insure­d" on the policy. While the primary resource in addressing insurance needs should be an insurance agent or broker, here is a very basic look from an attorney's perspe­ctive at some common­ly-­req­uired engine­eri­ng-­project policies and what they mean for a business.

1. General liability

At its most basic level, general liability insurance protects against claims for bodily injury and property damage that result from the insured's negligent activi­ties. If a system integrator employee carelessly leaves a piece of equipment in a high-t­raffic area of a customer's facility, and someone trips over it, the integr­ator's insurance company would defend the integrator against the resulting personal injury lawsuit (and any damages, up to the coverage limits, owed to the injured visitor).

Similarly, if the system integrator neglig­ently performs wiring work on a customer's project that results in a fire damaging the customer's products, the insurance will respond to the claim that the customer would likely file against the system integrator for the loss.
One important standard "­car­ve-­out­" of this coverage, however, is damage to the system integr­ator's own work on the project. Insurance is not a warran­ty—it often will not protect against claims resulting from poor workma­nship or the project's failure to meet the customer's needs.

2. Auto liability

In the same way that personal car insurance protects against the risk of a lawsuit from a driver neglig­ently rear-e­nding someone at a traffic light, auto liability insurance responds to damages owed arising from the operation of compan­y-owned vehicles. The system integrator should work with an insurance broker to ensure it is approp­riately protected in the event employees use their own cars (or rental cars) while "on the clock."­

3. Worker's compen­sation

Legally required in many circum­sta­nces, worker's compen­sation or employer's liability insurance protects against payments that may be owed resulting from occupa­tional injuries and diseases suffered by the insured's own employees. Because each state has different requir­ements (and employer protec­tions), providing accurate inform­ation to the insurance agent about the location company's projects is vital to ensure compliance with local laws and protection against these types of claims.

4. Profes­sional liability

If work includes providing profes­sional services (such as engine­ering), insurance for profes­sional liability and errors and omissions should be a key part of a risk management system. It covers claims that result from rendering profes­sional services that do not meet the applicable standard of care for that profession

5. Property insurance

Typically carried by the customer in larger physical develo­pment projects, property insurance or "­bui­lder's risk" insurance policies insure "the work itself­" during perfor­mance until the customer accepts the completed project. Thus, if a natural disaster destroys the system integr­ator's physical in-pro­gress work, this insurance would provide money for the system integrator to re-perform it in the rebuilt facility. If the customer is not carrying the approp­riate coverage, the system integrator firm may have to re-do its destroyed or damaged work at its own expense.

6. Other coverages

Many other specialty policies exist that may be an important part of system integr­ation project risk management strategy, including enviro­nmental clean-up coverage and insurance for tools and equipment stored at a customer's facility during a project.

Any insurance agent can sell a policy—but more useful are agents that partner with clients in struct­uring a risk management system to meet a company's needs.

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