BONDS AND INSURANCE

3.1 General- For Owners with OCIP 3.1.1 The Contractor shall not commence work under the Contract until he has obtained the various insurances policies and bonds specified in the Owner's Controlled Insurance Program. Owner shall provide to Contractor an exact copy of the applicable Owner Controlled Insurance Program manual together with the Contract Documents. 3.2 General- For Owners without OCIP. 3.2.1 The Contractor shall not commence work under the Contract until he has obtained the various - 13 - UNIFORM GENERAL CONDITIONS FOR PUBLIC WORKS CONTRACTS insurances and bonds specified in this section and has submitted to the Owner certificates of insurance (and other evidence requested by Owner) evidencing his compliance with the various insurance requirements set forth in this Article. 3.2.1.1. Unless otherwise indicated in the Contract Documents, Contractor must, within ten (10) calendar days from the Notice of Award, provide to Owner, in form satisfactory to Owner as provided in detail in this Article, the following: 3.2.1.1.1. Performance Bond 3.2.1.1.2. Payment Bonds 3.2.1.1.3. Workmen's Compensation Insurance Policy issued by The Puerto Rico State Insurance Fund and all Social Insurances required by law. 3.2.1.1.4. General Liability Insurance 3.2.1.1.5. Business Auto Policy 3.2.1.1.6. Contract Works Policy (Builder's Risk) 3.2.1.1.7. Installation Floater Policy (when applicable) 3.2.2 Notwithstanding the requirements set forth in this Article, the Owner may opt out of part of the requirements included in this Article and require any and all other policies that it understands are needed for its particular construction projects, including other policies not required herein. 3.2.2.1. However, such decision to opt out of part of the requirements of this Article must be written and signed by the Owner stating particularly the reasoning behind it Such written decision must be made part of Owner's Project file. 3.2.3. The insurance and bond policies required herein shall be obtained from insurance and surety companies complying with the requirements of Puerto Rico's Insurance Commissioner. 3.2.3.1. Prior to Bid announcement Date, Owner will publish a list of unacceptable insurance and bonding companies so that Contractor has knowledge of which companies are not authorized to provide insurances or bonds for the Work. Unless otherwise indicated in the Contract Documents, the Contractor must obtain an endorsement naming the Owner as an additional insured in each of the required insurance policies in this Article (as applicable). 3.2.4 The Contractor shall, throughout the performance of Work under the Contract and until the Final Acceptance of the Project, maintain current, and in effect all the required insurance, except the Contract Works Policy (Builder's Risk), which shall terminate on the date of Substantial Completion. 3.2.4.1. If on the termination date of any of the policies, the Project is still under construction and the Contractor has not renewed the policies, the Owner can renew them and deduct the amount paid for the premium, and applicable costs from the next payment, only if Contractor does not remedy and provide timely evidence of coverage. 3.2.5. Insurance coverage in the minimum limit amounts set forth herein shall not be construed to release the 14 - UNIFORM GENERAL CONDITIONS FOR PUBLIC WORKS CONTRACTS Contractor from liability in excess of such coverage limit. Contractor must give thirty (30) calendar days written notice to Owner before any policy coverage is changed, canceled or not renewed and shall cause the insurance carrier to do the same. 3.2.6 Acceptance of Insurance; Option to Replace. If either Owner or Contractor has any objection to the coverage afforded by or to other provisions of the insurance required to be purchased and maintained by the other party in accordance with this Article on the basis of non-conformance with the Contract Documents, the objecting party shall so notify the other party in writing within twenty (20) days after receipt of the certificates of insurance and bonds (or other such evidence) required by Article 3.1.1. 3.2.6.1. Owner and Contractor shall each provide to the other such additional information with respect to insurance provided as the other may reasonably request. 3.2.6.2. If either party fails to purchase or maintain all of the insurance required of such party by the Contract Documents, such party shall notify the other party in writing of such failure prior to the start of the Work, or of such failure is to maintain, prior to any change in the required coverage. 3.2.6.3. Without prejudice to any other right or remedy, the other party may elect to obtain equivalent insurance to protect such other party's interest at the expense of the party who was required to provide such coverage, and a Change Order (or Extra Work Order in a unit price Contract) shall be issued to adjust the Contract Price accordingly. 3.2.7. If Owner finds it necessary or convenient to occupy or use a portion or portions of the Work prior to Substantial Completion of all the Work as provided in section 14.5 no such use or occupancy shall commence before the insurers providing the property insurance pursuant to section 3.6 have acknowledged notice thereof and in writing effected any changes in coverage needed thereby. 3.2.7.1. The insurers providing the property insurance shall consent by endorsement on the policy or policies, but the property insurance shall not be canceled or permitted to lapse on account of any such partial use or occupancy. 3.2.7.2. If the Owner accepts, occupies, or uses a portion, or portions, of the Work for its intended use, or whatever use he deems necessary or convenient, it is the Owner's responsibility to insure the property comprising said portion, or portions of the Work. 3.2.7.3. If the Contractor obtained the Contract Works Policy (Builder's Risk) for the Work, the Owner may request that Contractor continues to carry said insurance and will pay the cost, as a Change Order, based on the proportion of the occupied area versus the total Project area. 3.2.7.4. If requested by Contractor, the Owner shall supply copy of its insurance policy, and/or certificate of insurance evidencing that said portion, or portions, of the Work now under the Owner's care, custody and control is properly insured. 3.3 Performance, Payment, and Other Bonds 3.3.1. Unless otherwise stated in the Contract Documents, the Contractor must, within ten (10) calendar days from the date of Notice of Award, furnish and file with the Owner, in form satisfactory to, and with Sureties approved by the Owner, the following: 3.3.1.1. Performance Bond to guarantee the faithful performance of the Contract, in an amount equal to at least fifty percent (50%), but not more than one hundred percent (100%) of the Contract Sum, as stated in the Supplementary General Conditions of the Contract. If none is stated, the amount shall be one hundred percent - 15 - UNIFORM GENERAL CONDITIONS FOR PUBLIC WORKS CONTRACTS (100%) of the Contract Sum. 3.3.1.2. Payment Bond, including Labor Bond in an amount equal to at least fifty percent (50%), but not more than one hundred percent (100%) of the Contract Sum, as stated in Supplementary General Conditions of the Contract. If none is stated, the amount shall be one hundred percent (100%) of the Contract Sum. 3.3.1.3. A separate and additional Payment Bond in an amount equal to the requirements of Law No. 111, approved June 22, 1961, as it may be amended in the future, payable to the Secretary of Labor of the Commonwealth of Puerto Rico to guarantee payment to laborers and employees of the Contractor. 3.3.1.4. Contractor shall also furnish such other Bonds as are required by the Contract Documents. 3.3.2. The Payment and Performance Bonds shall remain in effect as follows: 3.3.2.1. Under the Performance Bond: one (1) year after the date when the final payment becomes due for warranty work, as stipulated in the warranty clause, or as provided otherwise by Laws or Regulations or by the Contract Documents. 3.3.2.2. Under the Payment Bond: six (6) months after the retainage is paid in full to the Contractor, except as provided otherwise by Laws or Regulations or by the Contract Documents. 3.3.3 All Bonds shall be in the form prescribed by the Contract Documents except as provided otherwise by Laws or Regulations. All Bonds must be signed by an attorney in fact duly authorized by the Commissioner of Insurance of Puerto Rico, and must be accompanied by a certified copy of such power of attorney. 3.3.4 If the Surety on any Bond furnished by Contractor is declared bankrupt or becomes insolvent or its right to do business is terminated in any state where any part of the Project is located or it ceases to meet the requirements of the Puerto Rico's Insurance Commissioner, Contractor shall within twenty (20) days thereafter substitute said Bond and Surety with acceptable substitutes. 3.4 Workmen's Compensation Insurance 3.4.1 The Contractor shall provide Worker's Compensation Insurance as required by the "Workers' Compensation Act of the Commonwealth of Puerto Rico". The Contractor shall furnish the Owner a certificate from the State Insurance Fund Corporation covered by the Workers' Compensation Act of the Commonwealth of Puerto Rico. 3.4.2 The Contractor shall also be responsible for compliance with said "Workers' Compensation Act" by all his subcontractors and agents. 3.5 Contractor's Liability Insurance 3.5.1 Contractor shall purchase and maintain the following liability insurance coverage, in an occurrence format, and other insurance as is appropriate for the Work being performed and will provide protection from claims set forth which may arise out of or result from Contractor's performance of the Work and Contractor's other obligations under the Contract Documents, whether it is to be performed by Contractor, any Subcontractor or Supplier, or by anyone directly or indirectly employed by any of them to perform any of the Work, or by anyone for whose acts any of them may be liable: 3.5.1.1. Limits. Unless otherwise stated in the Special Conditions of the Contract, the liability insurance limits shall not be less than: 16 - UNIFORM GENERAL CONDITIONS FOR PUBLIC WORKS CONTRACTS 3.5.1.1.1. General Aggregate Limit $1,000,000 3.5.1.1.2. Products/Completed Operations Aggregate Limit $1,000,000 3.5.1.1.3. Personal and Advertising Injury Limits $ 500,000 3.5.1.1.4. Each Occurrence Limit $ 500,000 3.5.1.1.5. Fire Damage Limit $ 50,000 3.5.1.1.6. Medical Expense Limit $ 5,000 3.5.1.2. Claims for damages because of bodily injury, occupational sickness or disease, or death of any person other than Contractor's employees; 3.5.1.3. Claims for damages insured by reasonably available personal injury liability coverage which are sustained: (i) by any person as a result of an offense directly or indirectly related to the employment of such person by Contractor, or (ii) by any other person for any other reason; 3.5.1.4. Claims for damages, other than to the Work itself, because O injury to or destruction of tangible property wherever located, including loss of use resulting there from. + 3.5.2 The insurance policies so required by this section 3.4 to be purchased and maintained, unless otherwise specified in the Contract Documents, shall: 3.5.2.1. include at least the specific coverage and be written for no less than the limits of liability provided in the Supplementary Conditions or required by Laws or Regulations, whichever is greater, 3.5.2.2. include complete operations/premises/products insurance; 3.5.2.3. include contractual liability insurance covering Contractor's indemnity obligations under these General Conditions. Unless otherwise specified in the Contract Documents, the indemnity clause shall read as follows: 3.5.2.3.1. The Contractor for itself, agents, employees, successors and assigns agrees to save harmless the Owner, its Officers, Agents, Employees and Architect/Engineer from and against any and all claims, demands and/or suits, except as stated below, whether judicial or extra judicial for any cost whatever arising out or related to the execution of the Contract, and its insurers shall defend the Owner, its officers, agents, Employees and Architect/Engineer from such claims, demands and/or suits and shall bear all the expenses for such defense contemplated within the coverage limits provided by the Contractor's general liability policy, except where such claims, demands and/or suits are due solely to the negligence of the Owner, its Officers, Agents, employees and negligence, errors and/or omissions of the work performed by the Architect/Engineer. 3.5.2.4. include personal & advertising liability. 3.5.2.5 include XCU hazards (Explosion, Collapse, and Underground), as applicable. 3.5.2.6. include Contractor's subcontracted work; 3.5.2.7. include fire damage and medical expenses; 3.5.2.8. remain in effect at least until Final Acceptance and at all times thereafter when Contractor may be correcting, removing or replacing Work; in accordance with section 13.7 and 3.5.2.9. Include Employer's Liability - Stop Gap coverage with a minimum limit of five hundred thousand - 17 - UNIFORM GENERAL CONDITIONS FOR PUBLIC WORKS CONTRACTS dollars ($500,000.00) each personal occurrence and five hundred thousand dollars ($500,000.00) each accident. 3.6 Business Auto Policy 3.6.1 Automobile Liability coverage shall be written to protect the Contractor against all claims for bodily injuries to members of the public and damage to property of others arising from the use of motor vehicles, and shall cover operations on or the site of all motor vehicles, whether they are owned, non-owned or hired. 3.6.2 Unless otherwise stated in the Contract Documents, the liability limits shall not be less than: 3.6.2.1. Bodily Injury: two hundred and fifty thousand dollars ($250,000.00) each person and five hundred thousand dollars ($500,000.00) each occurrence. 3.6.2.2. Property Damage: one hundred thousand dollars ($100,000.00) each occurrence or two hundred and fifty thousand dollars ($250,000.00) combined single limit for bodily injuries and property damage liability. 3.7 Contract Work-Builders Risk Insurance 3.7.1 Unless otherwise provided in the Contract Documents, the Contractor shall provide a Builder's Risk policy for the amount of coverage set in the Contract Documents. The Builders Risk policy will insure against property damage to the building or structure being constructed or erected during the course of construction. 3.7.1.1. The description of covered property should include all fixtures, materials and supplies to be used in or incidental to, the construction. It should also cover equipment, machinery, materials, etc., not yet installed but destined to become a permanent part of the structure, on the Site or at off Site temporary storage locations. 3.7.1.2. This insurance shall be written under an Inland Marine all risk form, including earthquake, windstorm and flood coverage and shall protect the Contractor, Subcontractors, and the Owner and shall contain a waiver of subrogation clause against the insured parties. 3.7.1.3. Coverage shall be for an amount equal to the Contract Sum, unless otherwise specified in the Contract Documents. 3.7.1.4. Coverage shall include expenses incurred in the repair or replacement of any insured property. 3.7.1.5. Coverage shall include materials and/or equipment stored at the Site or at another location that was agreed to in writing by Owner prior to being incorporated in the Work, provided that such materials and/or equipment have been included in an Application for Payment recommended by Owner. 3.7.1.6. Coverage shall allow partial utilization of the Work by Owner, if Owner complies with Article 3.2.7, herein 3.7.1.7. Coverage shall include testing and startup. 3.7.1.8. Coverage shall be maintained in effect until Substantial Completion is achieved unless otherwise agreed to in writing by Owner and Contractor with thirty (30) days written notice to each other additional insured to whom a certificate of insurance has been issued. 3.7.1.9. Unless otherwise stated in the Contract Documents, flood coverage limits shall be for the Contract Sum or up to a maximum of $250,000.00, whichever is lower. - 18 - UNIFORM GENERAL CONDITIONS FOR PUBLIC WORKS CONTRACTS 3.7.1.10. Deductibles under this Policy shall be no more than: 3.7.1.10.1. Flooding no more than $5,000.00 3.7.1.10.2. For named windstorms, or hurricanes, no more than two percent (2%) of the Contract Sum. 3.7.1.10.3. For Earthquakes, no more than five percent (5%) of the total Contract Sum. 3.7.2. If the Contract Documents specify that Owner shall purchase the Builders Risk policy, said policy shall be under the same or better terms and conditions, than those indicated in section 3.6. If Contractor requests in writing that other special insurance be included in the property insurance policies provided under this section 3.6, Owner shall, if possible, include such insurance, and the cost thereof will be charged to Contractor by appropriate Change Order or Written Amendment. 3.7.2.1. Unless otherwise provided in the contract Documents, Owner shall be responsible for the deductible under this policy. 3.7.2.2. Prior to commencement of the Work at the Site, Owner shall in writing advice Contractor whether or not such other insurance has been procured by Owner. 3.7.3. The Contract Documents shall set forth, whenever applicable, which party shall purchase and maintain such boiler and machinery insurance or additional property insurance as may be required by the Supplementary Conditions or Laws and Regulations which will insure the interest of Owner, Contractor, and Subcontractors, each of whom is deemed to have an insurable interest and each shall be listed as an insured or additional insured. Unless otherwise set forth in the Contract Documents, said insurance, if needed, shall be purchased and paid for, by the Owner. 3.7.4. Receipt and Application of Insurance Proceeds 3.7.4.1. If Owner purchases said insurance, Owner is authorized and shall have power to adjust and settle any loss with the insurers unless one of the parties in interest shall object in writing to Owner's exercise of this power within fifteen (15) days after the occurrence of loss. 3.7.4.2. Owner shall settle with the insurers in accordance with what is agreed by the parties who own the insurable interest. 3.7.4.3. If no such agreement among the parties in interest is reached, Owner shall, on behalf of all parties, adjust and settle the loss with the insurers. 3.8 Installation Floater Policy 3.8.1. This policy shall be provided by the Contractor when Builders Risk policy does not apply and coverage is required for only a specific type of property during its installation. 3.8.2. The limit of insurance shall include the aggregate value of the Contractor's, Subcontractor's, or Owner's furnished equipment and materials to be erected or installed by the Contractor. - 19 - UNIFORM GENERAL CONDITIONS FOR PUBLIC WORKS CONTRACTS 3.8.3. This insurance shall be written under an Inland Marine all risk form, including earthquake, windstorm and flood coverage and shall protect the Contractor, Subcontractors, and the Owner and shall contain a waiver of subrogation clause against the insured parties. 3.9 Subcontractor's and Subcontractor's Liability Insurance. 3.9.1. Unless otherwise indicated in the Contract Documents, the Contractor shall, throughout the performance of Work under the Contract, procure and maintain in effect, and require all Subcontractors and others performing any such Work to procure and maintain in effect, insurance of the types applicable and with limits no less than the minimum amounts specified above, or insure the activity of his Subcontractors in his own policy. 3.10 Owner's Liability Insurance. 3.10.1 In addition to the insurance required to be provided by Contractor under Article 3.4, Owner, at Owner's option, may purchase and maintain Owner's own liability insurance as will protect Owner against claims which may arise from operations under the Contract Documents.