Watsonville Municipal Code Art. 7 Insurance

(a) Before any Franchise becomes effective, the Grantee shall obtain policies of commercial general liability, automobile liability, fire and property damage, and Workers’ Compensation insurance from a company or companies duly authorized, admitted and qualified by the Insurance Commissioner of California and the California Secretary of State to transact business in California with a best rating of A:VII or higher.

(b) The policies of commercial general liability insurance shall:

(1) Be issued to Grantee and name Grantor, its elected and appointed officials, employees, and agents as additional insureds;

(2) Indemnify Grantee and Grantor for all liability for personal and bodily injury, illness or death and damage to property arising from activities conducted and premises used pursuant to this Chapter by providing coverage therefor, including but not limited to, coverage for:

(i) Negligent acts or omissions of Grantee and its agents, servant and employees, committed in the conduct of Franchise operations, and/or

(ii) Use of motor vehicles;

(3) Provide a combined single limit for commercial general liability and automobile liability insurance in the amount provided for in the Franchise Agreement. The form of such insurance policy and the endorsement naming the Grantor or additional insured shall be subject to the review and approval of Grantor’s legal counsel; and

(4) Be noncancellable without thirty (30) days prior written notice thereof directed to Grantor.

(c) The policy of Workers’ Compensation Insurance shall:

(1) Have been previously approved as to substance and form by the California Insurance Commissioner;

(2) Cover all employees of Grantee who in the course and scope of their employment are to conduct the Franchise operations;

(3) Provide for every benefit and payment presently or hereinafter conferred by Division 4 of the Labor Code of the State (commencing with Section 3200) upon an injured employee, including vocational rehabilitation and death benefits; and

(4) Waive all rights of subrogation against the Grantor, its officers, officials, employees, and volunteers for losses paid under the terms of the policy which arises from work performed by the named insured for the Grantor.

(d) The policy of fire, property damage and casualty insurance shall provide insurance with extended coverage on the Franchise property used by Grantee in the conduct of Franchise operations in an amount adequate to enable Grantee to resume Franchise operations following the occurrence of any risk covered by this insurance.

(e) Grantee shall file with Grantor prior to commencement of Franchise operations the required endorsements and either certified copies of these insurance policies or at Grantor’s option a certificate of insurance for each of the required policies executed by the company issuing the policy or by a broker authorized to issue such a certificate, certifying that the policy is in force and providing the following information with respect to such policy;

(1) The policy number;

(2) The date upon which the policy will become effective and the date upon which it will expire;

(3) The names of the named insureds and any additional insured required by this Chapter or the Franchise Agreement;

(4) The subject of the insurance;

(5) The type of coverage provided by the insurance;

(6) Amount or limit of coverage provided by the insurance; and

(7) Any reserved amounts or deductible.

(f) Conduct of Franchise operations shall not commence until Grantee has complied with the aforementioned provisions of this Section.

(g) In the event Grantee fails to maintain any of the above-described policies in full force and effect, Grantor may upon forty-eight (48) hours notice to Grantee, procure the required insurance and recover the cost thereof from Grantee. Grantor shall also have the right, upon forty-eight (48) hours notice to Grantee, to suspend the Franchise during any period that Grantee fails to maintain said policies in full force and effect.

(h) No more than once during any three (3) year period, Grantor shall have the right to order Grantee to increase the amounts of the insurance coverage provided in this Chapter. Such order may be made by Grantor after complying with the hearing procedure provided for in Section 3-11.507. Increases in insurance coverage shall be based upon current prudent business practices of like enterprises involving the same or similar risks.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)

No later than the effective date of any Franchise granted under this Chapter, the Grantee shall establish and provide to the Grantor a Security Fund (the “Security Fund”) in a form and amount as specified in the Franchise Agreement as security for the faithful performance by the Grantee of specified provisions of the Franchise Agreement. The Security Fund shall increase annually at a rate equivalent to the San Francisco-Oakland-San Jose “All Items Index” (1967-100) Consumer Price Index.

(§ 1, Ord. 1054-98 C-M, eff. July 9, 1998)