Recently, I negotiated a contract that included Owners and Contractors Protective Liability insurance, otherwise known as “OCP” coverage, which is a project-specific policy. Thus, the policy limits are project-specific. Obtaining this OCP coverage includes discussion with a sophisticated insurance broker because the objective is always to ensure that there is insurance to cover a foreseeable or contractually assumed risk.
Many times, OCP coverage is procured by the contractor (listed as the designated contractor in the policy) for the owner, meaning the owner is the only insured on the policy. The contractor purchases this insurance for the owner, as an insured, to cover the contractor’s indemnification obligation to the owner. In a number of instances that I have dealt with OCP coverage it was largely because there was a concern with the additional insured endorsement of the contractor and/or its per occurrence limits.
OCP coverage applies to insure the owner from bodily injury and property damage claims (1) that arise out of the contractor’s operations performed for the owner at the project (e.g., vicarious liability) and (2) the owner’s actions or omissions in connection with its general supervision of the contractor’s operations. (See ISO CG 00 09 10 01) It applies to ongoing operations of the contractor as there is an exclusion in the policy for completed work. (See id.). It is not for completed operations.
The “Other Insurance” provision, different than in a CGL policy, provides that the OCP coverage is primary and “it will not seek contribution from any other insurance available to [the insured] unless the other insurance is provided by a contractor other than the designated contractor [contractor procuring policy or listed in the declaration]….” (See ISO CG 00 09 10 01).
It is always good practice, whether you are a contractor or an owner, to consult with your construction lawyer and insurance broker if you are considering OCP coverage as an extra layer of coverage. For more information on OCP coverage, this article is insightful. When it comes to insurance, the objective is to cover risks, whether foreseeable and/or assumed, so that there is the appropriate protection with respect to the project.
Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.