“Brokers and agents have a great opportunity to share their ideas with business owners who are building from scratch or doing large-scale renovation projects,” Said Peel. Under a Homeowners and Contractors Protective Liability Policy (OCP), the insured (usually an owner or general contractor) is protected from a lawsuit claiming damage or damage caused by work performed by an independent contractor for the insured. It also covers liability related to the insured`s responsibility to supervise these contractors. A contractor may be asked to purchase owner-contractor protection insurance from a project owner prior to the start of work on a project. Typically, there is no franchise purchased for an owner-contractor protection policy. The premium is based on the contract between the developer and the designated contractor. There is no requirement as to the type of work that a designated insured person has engaged a contractor. Therefore, the insured project can be of a personal, agricultural or commercial nature. The only requirement is that there be vicarious liability between an owner who has a contractor who works for that owner or a contractor who has subcontractors or independent contractors who work on his behalf. Peel adds, “In Canada, it`s less common to buy separate policies.
Most contractors use a CGL policy with additional insured status for construction projects. “OCP coverage is used when specialized contractors are called upon to work on a project basis. Proponents may be liable for negligent acts or omissions of the Contractor during the term of the Project. These exposures may include bodily injury or property damage to third parties. Although the supervised contractor buys the policy, the owner of the project is the insured. The insurance policy protects the insured against the actions of the specific contractor who purchased the policy, but only while that contractor is working at the location specified in the policy on the specified project. An insurance professional would be the right person to discuss this very important coverage. Contact The Safegard Group for more information or read more here! During a construction project, project owners and prime contractors can be held responsible for the actions of the subcontractors they hire and supervise. This indirect responsibility for the actions of the persons under their supervision is called the responsibility of the executing agent. An owner-contractor protective liability (OCP) policy financially protects the project owner in the event of a lawsuit related to the work of a subcontractor who was under the supervision of the project owner.
Commercial construction is expected to grow by 11% this year, with office construction by technology and financial companies leading the increase1. This recovery is accompanied by questions. Accelerated construction projects lead business owners to ask brokers in detail, “What is the difference between Homeowner and Contractor Protection (OCP) and General Business Liability (CGL) policies?” Growing technology and financial companies that once rented smaller spaces may decide to build their own office. These emerging companies do not necessarily have the necessary experience in construction and must turn to insurance brokers and agents. If you need to purchase protection insurance for homeowners and contractors, an insurance professional at Fusco & Orsini can help you get a policy with the best premium. Request a free quote. Owner-contractor protection insurance is valid for the duration of the project, and insurance coverage is limited to the particular project and its specific location. This indirect liability includes injury or damage caused by an employee in the context of a close employer-employee relationship. However, in the following circumstances, the financial consequences of actions committed by independent contractors can be attributed to an owner or general contractor: “Contractors performing project work have a CGL policy in place to cover site-specific liabilities,” said Tyson Peel, National Director of Property and Casualty Insurance at Burns & Wilcox Canada in Toronto. The additional insurance ratings on a CGL policy are very similar to a standalone OCP policy. However, knowing which direction your customer is taking may not always be clear.
“OCP is very specific and does not have separate cover pieces for products, completed projects, bodily injury and advertising damage, damage to rented premises or medical payment as a CGL policy would,” Suda adds. Whether a business owner starts with a new build and wants to use an OCP policy to delay the start of an LMA, or a project to renovate an existing space requires “additional insured” status in a CGL, the broker`s insight into navigating through coverage is essential. In addition to the initial cost savings, a project-based OCP policy provides coverage limits only to the project owner, while additional insured status shares the liability limits for the CGL policy. Noise-related violations are another example of claims. Large metropolitan areas like New York City have noise reduction plans for construction projects where working hours are limited to 7:00 a.m. .m to 6:00 p.m. .m. and must remain sensitive to noise for certain activities below a certain level2. Violations of a construction site`s noise regulations can have a negative impact on the neighborhood or result in lost sales, leading to a lawsuit if the problem persists. In the following circumstances, an owner or prime contractor may be held liable for the actions of an independent contractor.
“If a construction project owner is drawn into a lawsuit for oversight or bodily injury due to acts or omissions related to the overall oversight of a project by a contractor or subcontractor, OCP would provide the defense,” says Jessalynn Suda, associate general manager at Burns & Wilcox in Detroit/Farmington Hills, Michigan. “The OCP is intended for the liability of the vicarious agent that an owner would assume on behalf of the contractor.” Sign up to receive the latest industry news and product information from Burns & Wilcox. CGL forms are broader and are not necessarily limited to the insured`s acts or omissions with respect to the follow-up of the specified project. A glance at the first page of the forms can clear up industry confusion between the differences between OCP and CGL policies. These types of claims may fall under an OCP policy or the additional insured status of a CGL policy. One feature that makes the form unusual is that the named insured is NOT the person buying the coverage. The buyer is the entrepreneur. The said insured is insured for the acts of this particular entrepreneur, as well as for his own acts and omissions (omission of action) related to his supervision of this contractor. Commercial construction is flourishing.
The entire construction industry in the U.S. is expected to reach $712 billion by the end of 20163, and in the 10 years to 2020, the contractor industry in Canada is expected to grow by 3.1% per year.4 Under a OCP, the insured is protected in the event of a lawsuit alleging that damage or injury was caused by work performed by an independent contractor for the insured under the insured`s supervision. Protective liability policies for homeowners and contractors have become increasingly popular for a variety of reasons. One reason for this is that additional insured endorsements are becoming more and more restrictive. Another reason is that more and more insurers are insisting on using forms that contain global limits. This reason is directly related to the growing concern that more than one insured person in a policy increases the chances of exhausting the overall limit of the policy. The insured is insured for liabilities arising from acts or omissions during the general supervision of that designated contractor at the designated location. “Starting a new project with an OCP policy is a cost saving for a project owner because the CGL policy can be more expensive,” Suda said.
Once a project is complete, the OCP policy becomes unusable. At this point, a combined OCP and CGL policy can be written for vacant properties and existing land until commercial ownership (c.B retail store or restaurant) is fully functional. Checking the language on the first page of the OCP cover form displays the details. It specifies that it specifically covers the insured for the work to be carried out by a contractor, which is provided for in the policy, as well as for any act or omission on the site. The construction industry is huge and touches every facet of our lives, from the houses, condominiums and apartments we live in. “OCP claims are less frequent, with most claims coming from a third-party trip and close to a construction site,” says Suda. “We have also seen allegations that a business owner is being prosecuted for an unruly entrepreneur who creates excessive waste and throws away cigarettes.”