Memorandum

City of Lawrence

Administrative Service Department

TO:	David L. Corliss – City Manager
FROM:	Michael Bennett – Risk Manager
CC:	Cynthia Wagner – Assistant City Manager Diane Stoddard – Assistant City Manager Jonathan Douglass-Assistant to the City Manager
Date:	December 3, 2012
RE:	Lawrence Public Library-Builder’s risk Insurance

Introduction

Per the terms of the contract, this office was asked to find Builder’s Risk insurance for the new library.  Builder’s Risk Insurance covers the full replacement cost of the current library and its contents along with the cost of any completed modifications during the construction phase of the remodeling project.

Value and cost of Insurance

The current library has an estimated value of $8,000,000.  The cost of the expansion is $18,000,000.  Our broker, Arthur J. Gallagher, sent a copy of the plans and contract to multiple insurance carriers for bid.  We received four bids on the contract.  Hartford, our current property and casualty carrier, bid just over $147,600.  Starr Indemnity Insurance bid $100,000.  Excel Indemnity Company bid $52,000 and Darwin National Assurance Company bid $47,525.  The policy is for two years.  A start date has not been identified, but the end date will be two years from the start of construction.  It is a pro-rata policy meaning the City will receive a refund if the project is completed in less than two years. 

Darwin is an A.M. Best A XV rated carrier.  It also an “A” rated company by Standard and Poor’s.   This office has been advised by the broker that Darwin is a very good and reputable insurer.  The policy has been reviewed by Staff Counsel and by outside Counsel and been deemed acceptable.

Recommended Action

Staff recommends paying $47,525 for Builder’s Risk Insurance.