Title
Purchase of Builder's Risk Insurance For Phoenix Sky Harbor International Airport Terminal 3 North Concourse (Ordinance S-51367) - District 8
Description
Request to authorize the City Manager, or his designee, to purchase builder’s risk insurance covering the Phoenix Sky Harbor International Airport (Airport) Terminal 3 North Concourse Project (Project). Payment will be made to the City’s insurance broker, Marsh USA, in an amount not to exceed $3,500,000 for the builder’s risk insurance premium. Further, request to authorize the City Controller to disburse all funds related to this item.
The Builder’s Risk insurance policy has a $550,000 per occurrence deductible for water, flood, and windstorm and a $250,000 per occurrence deductible for all other perils, which will be applied if there is a physical damage loss to the Project. Additionally, request to authorize the City Controller to disburse funds to pay any required insurance deductible reimbursement payment up to $550,000.
Any residual funding will be applied to the procurement of an Owner’s Protective Professional Indemnity Insurance policy (OPPI), which provides indemnity for damages arising from negligent acts, errors, or omissions of the appointed contractor and construction professionals.
Report
Summary
If the City purchases the Builder’s Risk insurance, the policy will include business interruption coverage to protect the City from an interruption to the Airport’s revenue stream in the event of a loss that prevents operation of Terminal 3. The Construction Manager at Risk (CMAR) is unable to purchase business interruption coverage on behalf of the City.
The Finance Department’s Revenue & Risk Management Division has reviewed premium indications and evaluated the coverage, limits, and premium prices.
Financial Impact
Funds to purchase the Builder’s Risk insurance and to pay any required insurance deductible reimbursement are available in the Aviation Department Capital Improvement Program budget.
Location
Sky Harbor International Airport, 2485 E. Buckeye Road
Council District: 8
Department
Responsible Department
This item is submitted by City Manager Jeffrey Barton, Deputy City Manager Mario Paniagua and the Finance and Aviation departments.