A recent report found that the cost of construction disputes dramatically increased in 2020. They went from $30 million in 2019 to $54 million in 2020. The commercial construction industry has also seen an increase in so-called “mega disputes,” which involve large private projects. These disputes happened despite an overall decrease of construction spending according to the Census Bureau.
Workplace injuries account for 21,400 nonfatal workplace injuries in 2021. The Center for Disease Control does not paint a much better picture, with construction fatalities outpacing employment growth for some worker groups.
In this environment in increased construction disputes, it is more important than ever to be protected from liability. Owner's & contractors protective liability insurance is one tool that owners and general contractors have in their tool belts to protect themselves from excessive liability costs.
In this article, you will learn the answers to basic questions to make an informed decision about the best owners & contractors protective liability policy for you. These questions will include the following:
Definition of owners and contractors liability insurance
How the policy works
How much it costs
The best companies
Owners and contractors protective liability insurance is a stand-alone policy that helps cover project leads and general contractors from liabilities due to work done by contractors or subcontractors, often in the construction industry.
As mentioned, this type of protective liability insurance is meant only to protect one party, which is usually the contractor or the owner. These insurance contracts are generally project specific, making them separate from any general liability coverage. An owner or contractor will still usually need to purchase additional types of insurance to operate a project while avoiding liability.
Because owners & contractors' protective liability coverage is a separate policy, it is often purchased in conjunction with other necessary insurance policies. Below is how owners protective liability coverage differs from other similar policies.
| Policy | How it Works | How it Differs from OCP |
|---|---|---|
| Owner and Contractors Protective Liability (OCP) | Bodily Injury and Property Damage liability from contractors or subcontractors | N/A |
| Railroad Protective Liability (RPL) | Railroads are riskier for typical contractor liability policies, so this policy fills in the gap in coverage from a regular policy. The Code of Federal Regulations requires that railroad projects include a railroad insurance protective liability insurance | Broader coverage for railroad acts and omissions. Eliminates vicarious limits often in OCP from contractor workers |
| Project Management Protective Liability (PMPL) | Remedies additional problems that can arise during specific projects not covered by OCP. There is no standard form and is tailored and applied on a per-project basis | Emphasis on general supervision activities, which include preparing drawings and designs and taking control of subcontractor operations |
| Owners Protective Professional Indemnity (OPPI) | Adds supplemental coverage for professional errors and omissions claims. | Allows policyholders to exceed policy limits that can hold OCP insurance back |
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Owner contractor protective policy works by a contractor first purchasing OCP coverage. This policy then provides coverage to the project owner or general contractor named on the insurance contract. The coverage of owners contractors protective policy includes:
Bodily injury and property damage liability coverage for named insurers
Dedicated limits for the project owner or general contractors. Usual coverage amounts are $10 million for each occurrence though higher limits are available in the market
Legal defense expenses that may fall outside the policy limits
The benefits of buying independent contractors protective liability is primarily for the project owner or general contractor overseeing the project. That person or company listed on the insurance policy is the one being provided the primary coverage. Owners protective liability insurance is an essential purchase to protect against possible excessive liabilities costs. The benefits of buying this policy are listed below.
Low risk of cancellation–Because OCP liability coverage is often project-specific, it is much easier to tailor it to the needs of the project. Owners and contractors protective liability policy cannot be canceled without advance notice given to the first-named insured and any designated contractors
Limits–OCP liability policy limits do not require named insured to share with additional insured because OCP is a separate insurance policy. This means you don’t have to share limits for the same occurrences as with other types of contractor liability policies, allowing project owners and general contractors more insurance coverage to use for themselves
Loss is usually not factored in future premiums–Another advantage of project-specific insurance is that any losses on liabilities are not usually factored into future premiums. This means even if you have many liabilities to cover on one project, they will not often translate to your insurance premiums on another project
Reduces disputes with insurance companies–OCP policies do not have to enter the fight for being the “primary policy,” which often leads to disputes between carriers. Each insurance company will want the other insurance company to be the primary policy to minimize what they have to pay out. OCP policies are, by default, the primary policy for owners and general contractors.
No, owner and contractor protective liability coverage will not replace any existing general liability policy. Owners & contractors protective liability insurance is a supplemental insurance that will exist on top of any existing general liability policies.
Owners protective liability policy places emphasis on protective owners and project managers first, so they don’t have to worry about sharing any insurance policy limits.
An owners and contractors protective liability coverage form often has application requirements that prospective buyers must satisfy. The requirements include the following:
Must currently have an existing construction general liability policy
Naming Insured and Project Owners Name
Defining project scope and construction costs
Having an audit contact for your worksite
Defining primary and excess limits
Filing additional details for multiple projects
Deciding the effective date of the coverage as well as the expiration date
The cost of owners protective liability coverage can start as low as $69 per month or $828 per year. Below is a comparison of some of the best policy providers and how much they cost monthly:
| Company | Cost per Month | Cost per Year | Best for |
|---|---|---|---|
| The Hartford | $69 | $828 | Smooth application process |
| Travelers | $88 | $1,056 | Claims specialization |
| BlueRock | $99 | $1,188 | Expertise |
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Here are the best owner and contractor protective liability insurance companies. Read some of the reviews below to know their pros, cons, and average cost.
Easy application to fill out
Tracking claims is simple
Small business playbook helps figure out what information you need
Quotes through agents
The Hartford is an excellently rated provider of owners contractors protective liability coverage. They have an A- (excellent) rating from AM Best. Their owner's and contractor's protective liability policy gives primary coverage to project owners and general contractors. They have an easy-to-download and fill-out application to pass along to your insurance agent or broker to get started on this extra coverage.
The company has been underwriting insurance policies for over 211 years. They had over $11 billion in direct premiums written in 2022 and provided policies for over one million small business clients. The Hartford is headquartered in Connecticut and employs approximately 18,100 people. They also ranked #160 in the Forbes 500 list of prestigious companies.
Best for: Smooth application process
Average cost: $69 per month
Our rating: 10/10
Specialized construction claim service to make claims less stressful
Proactive policy approach
Risk control
Requires an agent to purchase
Travelers Insurance has some excellent systems in place for construction insurance buyers. Their policies contain risk control policies that help you reduce the chance of workplace accidents at the worksite. They also have an entire claim service just for construction claims, which can often get contentious and challenging to resolve.
They boast an amazing A++(Superior) Rating from AM Best and have been in the business of insurance for over 165 years. They have over 30,000 employees and are the second-largest commercial insurance carrier in the US. Their insurance premiums brought in $35 billion in revenue in 2021.
Best for: Claim specialization
Average cost: $88 per month
Our rating: 8/10
Policy experts
Tailored policies
Not an insurance provider
BlueRock offers competitive owner’s and contractor’s protective liability policy options through its multiple partners. They offer experts who can help you figure out the particulars of your project and to get covered more efficiently and quickly. Their OCP policy has more limitations compared to other competitors, not allowing excess coverage able to be purchased if you think you might exceed policy limits.
The BBB gives BlueRock an A+ for customer satisfaction. They are licensed in the states of New York, New Jersey, Connecticut, and Pennsylvania.
Best for: OCP coverage from multiple companies
Average cost: $99 per month
Our rating: 6/10
Use anyone except Employers. Period. They are non-transparent and shameful. After I complained long enough to warrant a call from a supervisor, the supervisor called back from a PRIVATE NUMBER (no caller ID), left a message that they are not reversing their decision (without any communication with me), and failed to leave a phone number for me to call back. She was hiding! They also fact find via email and phone calls, which is terrific for speed and communication. However, after setting a precedence of email or phone calls, they send time sensitive information via email, without any heads up... they are hoping you miss it and forfeit via expiration. Evil policies. Go elsewhere.
This place is an absolute joke of a company and should be ashamed of the way they conduct business. I was hurt on the job at the end of July and it took them just shy of 7 weeks to issue out a paycheck to me. Yes the amount was back dated but still. Not many have the luxury of not receiving a paycheck for almost 2 months. To top it all off, the original adjuster marked me down for the wrong state which caused a problem from the get go, I've had 3 different adjusters now since each one can't seem to figure out the simplicity of my claim. All my paperwork which includes, my job, house, and drs visits all are from the same state and city but yet some how I have been filed under a completely different state 1500 miles away. They do not answer your phone calls or emails no matter how many you leave. I've had to escalate my frustrations to the supervisors of each of these individuals in order to even get some kind of response. I've had more communication and information given to me about my claim from the customer service representatives then the actual adjusters.......... please tell me how that works?! A serious overhaul needs to happen here in order to serve your clients the way they deserve to be taken care of. 10/10 do not recommend this company to a single soul on earth
I have never had the displeasure of working with a more incompetent and disrespectful person in my life. I’m an injured worker and the adjuster that was assigned to my case was named Carrie Furgeson. In the past 6 weeks that I’ve been injured and out of work I have only been able to get ahold of her twice, not for lack of trying. I have left countless voicemails, countless emails, and she ignores them all. When I am finally able to get ahold of her I’m greeted with terrible customer service. She is rude, she talks over me and I’m hardly able to get a word in edgewise. She spelled my name wrong on my documents even after I spelled it for her properly countless times, this caused a whole new issue with my bank. I have bill collectors from the hospital calling me demanding payment and Carrie Furgeson won’t do a single thing to help, or to get them paid. All of my documentation is in Colorado, my job is in Colorado, my address is in Colorado, all my Dr offices and appointments have been in Colorado and Carrie still managed to hold my claim because she wasn’t sure what state she needed to file it under. It’s been 6 weeks since my Injury and my company still hasn’t received the wage paperwork to fill out so they can get me my correct wages. When she’s not ignoring me she’s answering my questions with “I don’t know” well I don’t know how she got this job, because apparently she doesn’t know anything about it. She is a disgusting morose individual inside and out and I genuinely wish her the worst in all of her future endeavors. I highly recommend you don’t use this company. Please if you are a business owner and your looking into this company please don’t use them. I’m sure they have the cheapest payment and that’s why companies use them in the first place, but you will be doing your employees a grave disservice by forcing them to venture into this absolute dumpster fire of a company. I would rate 0/5 if possible but 1 was the lowest I was allowed.
Their general liability insurance purchase process is simply the best online experience I've ever had in my life!
As long as they cover your line of business, you're literally covered! best rates, best coverage, best online experience, best professionals, can't be happier that I chose them!
Not all those who wander are lost.
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