Owner Contractor Protective Insurance Programs Overview
During a construction project, project owners and primary contractors can be held responsible for the actions of the subcontractors they hire and supervise. This indirect responsibility for the actions of those under their supervision is known as vicarious liability. An owner-contractor protective liability policy (OCP) protects the project owner financially in the case of a lawsuit regarding the work of a subcontractor who was under the supervision of the project owner.
What Owner-Contractor Protective Insurance Covers
Under an OCP, the insured is protected in the case of a lawsuit that claims damage or injury was caused by work done by an independent contractor for the insured while under the supervision of the insured.
Although the supervised contractor purchases the policy, the owner of the project is the insured. The insurance policy protects the insured from the actions of the specific contractor who purchased the policy, but only while that contractor is working on the specified project in the location listed in the policy.
The insured is covered for liabilities that arise from acts or omissions during the general supervision of this designated contractor at the named location.
Under the following circumstances, a property owner or primary contractor may be held liable for actions of an independent contractor.
- When the contractor is required to do work that is inherently dangerous, such as using explosives,
- When the contractor is required to do work that cannot be delegated to others due to laws or regulations,
- When the act that causes damage or injury was due to hiring an incompetent contractor for the job.
An owner-contractor protective insurance policy lasts for the length of the project, and policy coverages are limited to the specific project and its specific location.
Considerations for Owner-Contractor Protective Insurance Coverage
A contractor may be asked to procure an owner-contractor protective insurance policy by a project owner before work on a project begins.
Usually there is no excess coverage purchased for an owner-contractor protective policy. The premium depends on the contract between the project owner and the designated contractor.
How to Get Started
If you are required to purchase an owner-contractor protective insurance policy, an insurance professional at Fusco & Orsini can help you obtain a policy with the best premium. Request a free quote.