What is an Owner & Contractors policy?
An Owner and Contractors Policy (OCP) is insurance that protects the insured in cases where losses stem from negligence on the part of a contractor or subcontractor. These policies are project-specific, standalone policies, and they are purchased by the contractor for the project owner.
Such policies offer vicarious liability coverage, which serves to protect the project owner from any negative impact resulting from a contractor’s actions or omissions over the course of a project. These policies also cover actions or omissions performed by the insured in connection with supervision of the project.
OCPs have numerous advantages that make them desirable for those seeking additional coverage during a project. To begin, as the policies are project-specific and standalone, designated limits are set at the onset of the policy. This stands in contrast to the shared limits that may arise if, on a Commercial General Liability (CGL) Policy, the General Contractor names the owner as an additional insured.
Additionally, the coverage provided by an OCP supplements the owner’s additional insured status on the general contractor’s policy.
Where is an Owner & Contractors Policy not enough?
Despite the multifaceted coverage provided by an OCP, there are instances where merely an OCP is not enough to cover an owner’s risk.
For example, many projects may involve significant or even minor construction. OCPs, for all their benefits, only cover construction-related activity at the designated premises, which does not account for the many non-construction related hazards that are bound to spring up during such a project. Damage resulting from weather-born hazards are a prominent example of cases where OCP coverage would be insufficient; if someone were to slip and fall on the property as a result of rain or snow, for example, an OCP would not provide coverage.
Furthermore, coverage under an OCP only lasts until the project’s completion. Despite a contractor’s or owner’s best efforts, minor errors or slip-ups during a project can cause defects leading to injury or damage further down the line. Claims resulting from such a situation would not be covered by an OCP, as the project has already been declared finished. Once operations are completed, the OCP is effectively terminated.
OCPs are helpful and provide peace of mind for owners embarking on a project, but the policies’ numerous gaps may lead to increased risk, damage, and loss. Working to fill these gaps is why many owners seek additional coverage.
How can Conway help fill the potential gaps?
With Conway’s years of insurance industry experience, we have seen and protected owners from risks arising from gaps in OCP coverage.
But our expertise means more than just numbers. We have a team of dedicated staff members who specialize in construction-related risks, meaning that if you are in need of assistance, we will connect you with a real human being who is knowledgeable in the field and can work with you to provide the services you require. In fact, one third of our premium volume is associated with construction-related risks.
If you are concerned that your policy coverage will not cover all of your potential risk, you may wish to consider an Owner’s Interest Policy. Obtaining an Owner’s Interest Policy through Conway means complete operations coverage in addition to full premises coverage. An Owner’s Interest Policy can also provide extended completed operations coverage. Although this is an optional extension, many owners find the increased care provided by this optional coverage to be beneficial in preventing loss.
In order to evaluate whether an Owner and Contractors Policy is sufficient for your company’s needs, you must understand the policy’s benefits and drawbacks. As site-specific and standalone policies, they have designated limits, and supplement the owner’s additional insured status on the general contractor’s policy. However, these policies can also be insufficient, lacking coverage for hazards outside the scope of construction (e.g. weather) and being time-bound by the completion of the project.
To combat these insufficiencies, Conway offers expertise for those looking to begin a project and seeking coverage. Additionally, if further coverage is wanted, Conway can organize an Owner’s Interest Policy, which provides additional coverage not offered under an OCP, e.g. complete operations coverage and full premises coverage.
For more information or to get in contact, reach out to Conway here.