CAA Approves Policy For Grand Center Project

June 5, 2002
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GRAND RAPIDS — The Convention and Arena Authority (CAA) has approved the contractor-controlled insurance program for the $219.5 million renovation and expansion of the Grand Center.

The coverage, known as a wrap-up policy, removes all the risk from the CAA, the building owner, and places it squarely on the shoulders of the general contractor, Erhardt-Hunt.

In return, Erhardt-Hunt will be entitled to keep any savings that may be generated from the project, estimated at industry standards to range from $366,000 to $475,000. Initially, the CAA and Erhardt-Hunt had planned on sharing those savings.

But Erhardt-Hunt remains liable for any losses from the project, a risk that could run as much as $600,000 or higher.

“There will not be any financial risk to the owner,” said Dale Sommers, who represents the board in the project.

The four-year policy will cost $3.4 million and provide $77 million worth of coverage, which includes workers’ compensation and general liability. The policy has a deductible of $250,000, which is the responsibility of Erhardt-Hunt, and requires that a loss-control officer be at the work site. It covers the owner, Erhardt-Hunt and all the subcontractors.

“It does give us additional benefits and latitudes in hiring local contractors. All contractors on site are covered by this policy. They do not have to purchase any insurance. Once they enter this site they are covered under this policy,” said Sommers.

“It has been proven in our bidding so far for DeVos Hall and the contracts that we’ve let that it is an advantage and is opening some opportunities for a lot of local individuals to participate in this project,” he added.

In addition, the wrap-up policy means that the CAA will save $350,000 because the board won’t have to buy owner’s-protection coverage.

“The program has been approved by the State Insurance Commissioner,” said Sommers.

Erhardt-Hunt is a joint venture between Erhardt Construction Co. of Grand Rapids and The Hunt Group of Indianapolis.

The wrap-up policy is being issued by The Saint Paul Companies Inc. of Saint Paul, Minn., and not the American Independent Group as first reported. Fortune ranks St. Paul at 222 on its list of top 500 companies. St. Paul Companies was founded in 1853 and is Minnesota’s oldest corporation. AIG is issuing the contractors’ pollution liability policy.

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