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Human Resources Department

Liability & Insurance

Template 17

Use Template 17 for:

Grants and Funding Agreements

Special Insurance Considerations for Grants and Funding Agreements

There are two sets of insurance requirements for Grants or Funding Agreements: Section I - Insurance requirements for the recipient and, Section II - separate requirements for any contractors or consultants engaged by the recipient. Please Contact Risk Management for Section II requirements.

Mandatory Contractual Language

Insurance requirements should be saved and attached to the contract as an exhibit. To ensure the requirements are included as part of your contract, please include the following language within the insurance section of the agreement:

_______ is required to maintain the insurance specified in Exhibit _____, which is attached hereto and incorporated herein by this reference.

Consistent Language

Edit the template to keep the language consistent with your agreement.

For example: if the template refers to: “Consultant”, but the agreement uses “Contractor”, change all references in the template to “Contractor”. If your agency is not the County (SCAPOSD, Water Agency, Fairgrounds, etc.) substitute the correct terminology for all references to “County”. If the agreement is called “contract”, “license”, “lease”, etc., edit the template to match.

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Template Assistant

Section I – Insurance to be Maintained by [insert name of recipient]

There are 2 sets of insurance requirements for grant or funding agreements: Section I - insurance requirements for the recipient and Section II - separate requirements for any contractors or consultants engaged by the recipient. Please Contact Risk Management (Outlook: 139 kB) for Section II requirements.


[insert name of recipient] shall maintain insurance as described below unless such insurance has been expressly waived by the attachment of a Waiver of Insurance Requirements. The insurance shall be maintained for [insert time period] after all funds have been disbursed.

County reserves the right to review any and all of the required insurance policies and/or endorsements, but has no obligation to do so. County’s failure to demand evidence of full compliance with the insurance requirements set forth in this Agreement or County’s failure to identify any insurance deficiency shall not relieve [insert name of recipient] from, nor be construed or deemed a waiver of, its obligation to maintain the required insurance at all times during the performance of this Agreement.

The named insured must match the name of the recipient. Some policies have several named insureds, but all insureds may not show on the certificate. If there’s no match on the certificate, request a copy of the endorsement showing the full named insured, including the recipient.

Be sure the name on the agreement is the full legal name of the entity with whom we are contracting and not just a "dba" (doing business as), which is only a fictitious name.

  1. Workers Compensation and Employers Liability Insurance
    1. Required if [insert name of recipient] has employees as defined by the Labor Code of the State of California.
      Under California’s Labor code, if the party with whom we are contracting is a privately held corporation whose only employees are its sole shareholders, workers compensation insurance is not required. Similarly, if the party with whom we are contracting is a partnership or limited liability company with no employees other than its general partners or managers, workers compensation insurance is not required. A waiver is not needed.
    2. Workers’ Compensation insurance with statutory limits as required by the Labor Code of the State of California.
    3. Employers’ Liability with minimum limits of 1,000,000 per Accident; 1,000,000 Disease per employee; 1,000,000 Disease per policy.
    4. Required Evidence of Insurance: Certificate of Insurance

    If [insert name of Recipient] currently has no employees as defined by the Labor Code of the State of California, [insert name of Recipient] agrees to obtain the above-specified Workers Compensation and Employers Liability insurance should employees be engaged during the term of this Agreement or any extensions of the term.

    If the recipient has no employees, Workers Compensation insurance is not required. The recipient is obligated to obtain the insurance if employees are hired after the inception of the agreement. A Risk Management waiver is not needed if the recipient has no employees.

    To verify that the recipient has no employees, Risk Management recommends that you have the recipient sign the Workers Compensation Declaration (Word: 25 kB).

  2. General Liability Insurance
    1. Commercial General Liability Insurance on a standard occurrence form, no less broad than Insurance Services Office (ISO) form CG 00 01.

      ISO (Insurance Services Office) publishes a standard CGL. Some insurers use that specific form; others use their own form with a different numbering system. Any CGL is acceptable as long as the coverage is as broad as the ISO form.

      An occurrence policy responds if the injury or damage takes place during the policy period. It doesn’t matter when the claim is filed.

      A claims-made policy responds if the claim (demand for money) is made during the policy period.

    2. Minimum Limits: $1,000,000 per Occurrence; $2,000,000 General Aggregate; $2,000,000 Products/Completed Operations Aggregate. The required limits may be provided by a combination of General Liability Insurance and either Commercial Excess or Commercial Umbrella Liability Insurance. If [insert name of recipient] maintains higher limits than the specified minimum limits, County requires and shall be entitled to coverage for the higher limits maintained by [insert name of recipient].

      Occurrence limit: the most the insurer will pay for any one accident.

      General Aggregate: the most the company will pay for all claims resulting from damage or injuries that occur before the work is completed, regardless of the number of accidents, injuries, claims or claimants. A policy with no general aggregate is acceptable because there’s no annual cap on the amount the policy will pay.

      Products/Completed Operations Aggregate: the most the insurer will pay for all claims resulting from damage or injuries that occur after the work is completed, regardless of the number of accidents, injuries, claims or claimants.

      A Commercial Umbrella or Excess Liability policy provides additional limits which are usually shown on the Certificate of Insurance. The additional limits are added to the General Liability Limits. The combined total of the General Liability Limits and the Umbrella Limits must equal or exceed our minimum requirements.

    3. Any deductible or self-insured retention shall be shown on the Certificate of Insurance. If the deductible or self-insured retention exceeds $100,000 it must be approved in advance by County. [insert name of recipient] is responsible for any deductible or self-insured retention and shall fund it upon County’s written request, regardless of whether [insert name of recipient] has a claim against the insurance or is named as a party in any action involving the County.

      Contact Risk Management (Outlook: 139 kB) if the retention or deductible exceeds $100,000.

      We want to verify that the party with whom we are contracting has sufficient assets to fund a large retention or deductible.

      There is no specific field on the Certificate of Insurance for a General Liability deductible or retention.

    4. [insert exact name of additional insured] shall be endorsed as additional insureds for liability arising out of [insert name of recipient]’s ongoing operations. (ISO endorsement CG 20 26 or equivalent).

      We must get a copy of the endorsement or section of the policy that makes us an additional insured. A statement on the Certificate of Insurance is not sufficient because an insurance company is bound by its policy and endorsements, not by the Certificate.

      Additional insured endorsements which do not include our name are acceptable if they have language granting additional insured status to parties for whom our vendor (or consultant, contractor, permittee, licensee, tenant, etc.) is required to provide additional insured status under a contract or agreement. Submit a HelpRequest (Outlook: 139 kB) if you’re not sure the endorsement is acceptable.

      Ongoing operations refers to injuries and damage that happen while the work is in progress.

      Completed operations refers to injuries and damage that happen after the work is complete.

      Additional insured status for liability arising out of completed operations is not required for grant or funding recipients.

      Do not accept ISO form CG 20 10 (or its equivalent) because it gives us coverage for liability arising from work done for us by the recipient. The recipient is doing no work for us; hence, the CG 20 10 provides no protection.

    5. The insurance provided to the additional insureds shall be primary to, and non-contributory with, any insurance or self-insurance program maintained by them.

      Because the County is an additional insured on the recipient’s policy, we want that policy to cover claims before any contribution from County’s CSAC protection or its self-insured retention.

      Some insurers refuse to add " primary & non-contributory" language. In this situation, you may accept the insurance anyway. Why? Because California Government Code Section 990.8 states that a public agency’s self-insurance and/or participation in a risk sharing pool (CSAC) does not qualify as insurance. Legally, County has no insurance. The coverage provided to County as an additional insured on the permittee’s policy is the only insurance we have. By default it is primary and non-contributory. It is preferable to have the insurer provide the required language, but not mandatory.

    6. The policy definition of "insured contract" shall include assumptions of liability arising out of both ongoing operations and the products-completed operations hazard (broad form contractual liability coverage including the "f" definition of insured contract in ISO form CG 00 01, or equivalent).
    7. The policy shall cover inter-insured suits between County and [insert name of recipient] and include a "separation of insureds" or "severability" clause which treats each insured separately.

      This guarantees that the County will be covered if it is sued by the recipient and that the recipient will be covered if it is sued by the County. This language is standard in the General Liability policy; you do not need to get a specific endorsement to satisfy this requirement.

    8. Required Evidence of Insurance:
      1. Copy of the additional insured endorsement or policy language granting additional insured status; and
      2. Certificate of Insurance
  3. Automobile Liability Insurance
      1. Minimum Limits: $1,000,000 combined single limit per accident. The required limit may be satisfied by a combination of Automobile Liability Insurance and either Commercial Excess or Commercial Umbrella Liability Insurance

    If there is a Commercial Umbrella or Excess Liability Policy, the limits are the sum of the Auto Liability limits plus the Umbrella/Excess limits. If there is no evidence of Auto Liability Insurance, an Umbrella or Excess Liability will not provide Auto Liability Insurance.

    1. Insurance shall cover all owned vehicles if recipient owns vehicles.
    2. Insurance shall cover hired and non-owned vehicles.

      Hired Autos: vehicles the recipient rents or borrows.

      Non-owned Autos: vehicles owned by the recipient’s employees, volunteers or contractors.

      If "Any Auto" is checked on the Certificate of Insurance, it includes owned, hired and non-owned autos.

    3. Required Evidence of Insurance: Certificate of Insurance
  4. Professional Liability Insurance

    (Only required of recipients whose normal operations include professional services. See Professional Liability: What is it and When is it Required for more information )

    Examples of recipients who must maintain professional liability insurance: organizations that provide legal aid; organizations that provide medical or counseling services.

    Examples of recipients who do not have to maintain professional liability insurance: organizations that acquire, restore and enhance forests or wetlands or rivers; organizations that create recreational facilities or gardens.

    If you can’t determine whether a particular recipient needs professional liability insurance, Contact Risk Management (Outlook: 139 kB) for assistance.

    1. Minimum Limit: $1,000,000 per claim or per occurrence.
    2. Any deductible or self-insured retention shall be shown on the Certificate of Insurance. If the deductible or self-insured retention exceeds $25,000 it must be approved in advance by County.

      Contact Risk Management (Outlook: 139 kB) if the retention or deductible exceeds $25,000. We want to verify that the party with whom we are contracting has sufficient assets to fund a large retention or deductible.

      There is no specific field on the Certificate of Insurance for a General Liability deductible or retention.

    3. If the insurance is on a Claims-Made basis, the retroactive date shall be no later than the commencement of the work.
    4. Required Evidence of Insurance: Certificate of Insurance
  5. Standards for Insurance Companies

    Insurers, other than the California State Compensation Insurance Fund, shall have an A.M. Best’s rating of at least A:VII.

    A.M. Best is one of the services that reviews insurers’ financial information. We want the insurer to be able to pay its claims. The letter (A+, A, A-, B+, etc.) is Best’s rating of financial strength. The number (XII, VII, etc.) refers to the insurer’s financial size. You can check the rating at: http://www.ambest.com/ - the service is free, but you need to register and log in.

    Department Waiver: You may waive the A.M. Best’s rating if an insurer’s rating is below A:VII.

  6. Documentation
    1. The Certificate of Insurance must include the following reference: [insert project name].

      Putting project name or grant description on the Certificate of Insurance does not increase our protection. This requirement is included for your convenience.

    2. [insert name of recipient] shall submit required Evidence of Insurance prior to the execution of this Agreement. [insert name of recipient] agrees to maintain current Evidence of Insurance on file with County for the required period of insurance.
    3. The name and address for Additional Insured endorsements and Certificates of Insurance is: [insert exact name and address].
    4. Required Evidence of Insurance shall be submitted for any renewal or replacement of a policy that already exists, at least ten (10) days before expiration or other termination of the existing policy.
    5. [insert name of recipient] shall provide immediate written notice if: (1) any of the required insurance policies are terminated; (2) the limits of any of the required policies are reduced; or (3) the deductible or self-insured retention is increased.
    6. Upon written request, certified copies of required insurance policies must be provided within thirty (30) days.

      Because it takes much time and substantial expertise to review an entire insurance policy, we don’t routinely request it. However, if we cannot determine the adequacy of coverage from the certificate and endorsements, this is an option.

  7. Policy Obligations

    [insert name of recipient]’s indemnity and other obligations shall not be limited by the foregoing insurance requirements.

Section II – Insurance to be Maintained by [insert name of recipient]’s contractors and/or consultants


Contact Risk Management (Outlook: 139 kB)