107.13 Insurance Requirements

Sec 107.13 provides information on the contractor’s responsibility to obtain and keep in place various forms of insurance.

The contractor shall provide sufficient liability insurance coverage in an amount not less than the limit of the Commission’s liability under §537.610, RSMo. The type of insurance will be specified by MoDOT and shall include MHTC, MoDOT and employees as additional insured, and shall insure the Commission against claims that are the result of negligent acts, faults or unsafe conditions caused by the contractor.

The financial liability of public entities, like MoDOT, is statutorily capped. This is commonly called the Sovereign Immunity (SI) limits, is set by §537.610, RSMo, and indexed annually for inflation in the Missouri Register under the responsibility of the Missouri Department of Insurance. Conversely, the liability of contractors working in Missouri IS NOT capped and contractors can be assessed an unlimited amount of financial liability.

SI does not apply to public entities (that is, state agencies like MoDOT) in situations where it is alleged that:

1. Injuries caused due to negligent acts of public employees as a result of motor vehicle use.

2. Injuries caused by a dangerous condition of a public entity's property.

3. An inverse condemnation claim alleging MoDOT has interfered with a property owner’s full use and enjoyment of their property without just compensation.

Example of an acceptable
"Certificate of Liability Insurance"

The Missouri Standard Specifications for Highway Construction includes MoDOT’s insurance requirements. As one of the prequalifications to bid on MoDOT contract, a contractor is required to provide proof of insurability documented in a Certificate of Liability Insurance. After being awarded a MoDOT contract, but prior to starting the work on the project, the contractor is required to provide a contract specific Certificate of Liability Insurance along with endorsements that meets the minimum insurance requirements set forth in the contract and MoDOT's standard specifications. The contractor's Certificate of Liability Insurance and endorsements shall be submitted electronically to MoDOT directly from the insurance agent. A typical certificate, created by the insurance industry, is called an ACORD Insurance Certificate. Having a “standard” form provides an easy-to-understand explanation of benefits. MoDOT generally receives an ACORD certificate, but there are other forms used by the insurance industry.

The contractor, at a minimum, is required to carry General Liability, Workers Compensation, Commercial Automobile Liability, and Pollution Liability insurance to work on MoDOT road and bridge contracts. The contractor can carry other insurance and additional levels of insurance, provided the minimum amounts are carried to cover the SI limits. Specifications permit the prime contractor to utilize approved subcontractors to perform work under a subcontract agreement. The contractor is responsible for either providing insurance coverage for its subcontractors in the amounts specified in the contract, or for requiring its subcontractors to carry the necessary coverage. Since some contactors hold numerous contracts with MoDOT concurrently, MoDOT requires a per-project endorsement on the Certificate of Liability Insurance. The per-project endorsement is required to provide MoDOT with adequate coverage up to the SI limits for each contract when the contractor has multiple active contracts. Additionally, MoDOT requires that the Certificate of Liability Insurance include MoDOT/MHTC/employees as an “additional insured” endorsement. An additional insured endorsement does not provide the additional insured a separate set of limits; rather, the policy holder and additional insured “shared” the limits.

For example: Assume there is an 8-person accident on a resurfacing project. The contractor is the only entity involved (no subcontractors) and has a Certificate of Liability Insurance with a $3 million aggregate limit. The injured parties sue both the contractor and MoDOT, claiming the work zone was a dangerous condition. At trial, the court enters a judgment for $5 million against MoDOT and the contractor and assigns fault at 50/50 between MoDOT and the contractor. It is likely that the contractor’s portion of the judgment ($2.5 million) will be paid first by the contractor's insurance company and leave only $500,000 of insurance coverage for MoDOT’s portion of the judgment (also $2.5 million). In this example, the insurance MoDOT required the contractor to purchase on its behalf will not completely cover MoDOT’s portion of the judgment, leaving $2 million outstanding. In this situation, MoDOT would request the contractor to pay the remaining $2 million because the contract specifications require them to do so. If the contractor refuses, MoDOT could pursue litigation to recover the $2 million, as this would be considered a breach of contract.

Based on the project, it is important to determine if the minimum levels of insurance that will be shared should be raised to adequately cover potential liability risks to MoDOT.

Regardless of whether the contract is for a design-bid-build or a design-build project, the MHTC requires the contractor to insure and hold harmless the MHTC/MoDOT and employees for damages assessed arising from the contractor's actions or negligence.

Navigable Waters Insurance Protection

Any contractor and/or subcontractor performing work on or adjacent to the Missouri and Mississippi Rivers, and any other waters classified as “navigable waters of the United States” by the USACE, shall obtain insurance coverage in accordance with Sec 107.13.3. The Resident Engineer should verify that the contractor has the appropriate insurance prior to the start of any work on navigable waters. The RE may want to include mention of this requirement in the preconstruction letter and add it as a discussion item to the preconstruction agenda.

Jones Act insurance is required to cover all employees deemed by the courts as masters or members of crews of vessels who are entitled to seek recovery as “seamen” for injury or death under the Jones Act, or general maritime law. The contractor should provide proof of insurance to the Division of Construction and Materials before any work is performed. The Resident Engineer should consult the Construction Contract Administrator for verification of coverage.

US Longshore and Harbor Workers’ Compensation Act insurance is required to cover all employees who do not qualify as masters or members of crews of a vessel, but perform work in loading or unloading vessels, or work from docks, barges, or other platforms, and who may be deemed by the courts as entitled to seek compensation for injury or death under the US Longshore and Harbor Workers’ Compensation Act. The contractor should provide proof of insurance to the Division of Construction and Materials before any work is performed. The Resident Engineer should consult the Construction Contract Administrator for verification of coverage.