Summary: As additional insured coverage has narrowed over the years, and states have broadened their anti-indemnity statutes to eliminate sole and partial fault assumptions, coverage under the owners and contractors protective (OCP) policy is being viewed in more favorable light, despite its disadvantages. This discussion provides a broad brush overview of the OCP policy, and then takes a closer view of the more important provisions of this policy which is available by using the April 2013 edition of coverage form CG 00 09.
Topics covered:
Coverage for operations of designated contractor
The OCP policy's second coverage
Coverage for Operations of Designated Contractor
The OCP policy is issued to the person or organization desiring this coverage. In comparison to additional insured status, the OCP policy provides primarily vicarious liability coverage solely for ongoing operations. One of the advantages of the OCP policy, unlike additional insured status, is that coverage automatically applies on a primary basis. This is not to say that an additional insured cannot obtain coverage on that same basis. The problem is that primary coverage is not automatic. It has to be prescribed in a contract or agreement with an insurer willing to provide the coverage.
While the OCP policy automatically applies on a primary basis, coverage is not guaranteed. To obtain coverage, the OCP policy's named insured must be free from any fault, other than for its acts or omissions having to do with the general supervision of, for example, the subcontractor who purchases this policy for the benefit of an owner and/or general contractor. If a subcontractor or its employee(s) allege negligence of the OCP policy's named insureds, however, coverage will likely fail.
Introduction
The owners and contractors protective liability (OCP) policy is not intended to be a broad and all-encompassing form of protection. In its purest sense, the policy is primarily intended to provide some limited coverage to those named on the policy (named insureds) for their vicarious liability. For example, liability imposed on an owner or general contractor for acts arising out of the operations of independent contractors or subcontractors, or out of the owner's or general contractor's supervisory activity. Thus, coverage applies for the actual or alleged liability of those named on the policy that are alleged to be liable for the acts or omissions of those furnishing the policy and performing services for them.
Frequently, the need for OCP coverage is not clear because it may be difficult for many people to realize, for example, that an owner of a piece of property on which a building is being constructed may be held liable for the acts of the contractor handling the construction. A common belief is that the contractor, because he is performing the work, is the only party responsible for injuries or damage arising out of that work. Another similar belief is the idea that the general contractor cannot be held liable for the acts of a subcontractor because the subcontractor is the party actually performing the work.
Companies that install and/or inspect elevators commonly furnish these policies to property owners as an alternative to naming owners as additional insureds on their commercial general liability policies. Various property owners, particularly governmental agencies, will also request these policies, or are given a sales pitch to rely on these policies instead of requesting additional insured coverage when work is to be performed for them by contractors.
If the prospects for the OCP policy understand and are comfortable with the fact that coverage will not apply for their own acts or omissions (with one slight exception for certain insureds, mentioned later), but only for the acts or omissions of those performing the work or services, this policy can be a suitable form of protection. In fact, it is an ideal form of protection for situations involving property damage.
The problem is that named insureds on these policies have no control over what can bring about a claim or suit against them, and it is usually with bodily injury where claims arise. In fact, once an allegation is made by a contractor or its employee concerning an injury caused by an act or omission of the policy's named insured or its employee(s), there is little hope that the OCP policy will respond. In other words, the OCP policy's named insured has to be almost totally innocent of any act or omission or the policy will be useless—and it usually is in allegations of bodily injury.
It may be questioned that if the OCP policy is that bad, would being an additional insured be a better alternative? The answer will depend on (1) whether any entity would be willing to give an additional insured endorsement; and (2) the scope of the additional insured endorsement. It is not often the case, but sometimes an elevator inspection company, for example, not only will furnish a property owner with an OCP policy, but also will name the owner as an additional insured on the elevator company's CGL policy. Now, why an elevator company or any other business will relent and furnish both forms of protection is open to question. Presumably, it is because the company will lose the business if it does not compromise and offer the property owner what appears to be the more comprehensive approach toward inspection. However, it should not come as a surprise to learn that there may be an other insurance issue. In fact, one blanket additional insured endorsement issued on behalf of an elevator company states that the general liability policy to which the additional insured endorsement is attached does not apply to any person or organization for which the policy's named insured has procured separate liability insurance while the endorsement is in effect. This means the OCP policy remains as the only document that applies on a primary basis.
The following case makes the point.
Town Center Mall v. Zurich American Insurance Company, 797 F.Supp.2d 786 (2011) involved an employee (inspector) of Schindler Elevator Corporation, who was injured while working at a shopping mall. To complete his inspection, the inspector had to step on the escape hatch located at the top of the freight elevator. However, the welds securing the escape hatch were broken, causing the inspector to fall through the ceiling, suffering serious injuries. Twice prior to this event, the state had cited the mall's freight elevator for broken welds on that particular hatch. The insurer for the elevator inspection company's general liability policy made coverage subject to a blanket additional insured endorsement covering only those persons or organizations where required by written contract. This same insurer also issued an OCP policy to the mall's property management company.
When the property management company sought coverage for defense against the suit filed against it by the injured inspector, it was denied both under the OCP policy issued to it, and the GL policy issued to the elevator company. The reason coverage was denied by the OCP policy was because the allegations made by the injured inspector of (1) negligence by the property management company in failing to repair the hatch, and (2) in failing to warn about its defective condition despite two citations, clearly fell within exclusion d. of the OCP policy, which read: "This insurance does not apply to. . . Acts or Omissions by You or Your Employees."
From the United States District Court's perspective, the insurer had met its burden of proving an applicable exclusion and the property management company could not prove an exception to that exclusion. With the issue of the OCP policy out of the way, the court's next task was to determine if the property management company was an additional insured for purposes of the GL policy issued to the elevator company.
The blanket additional insured endorsement, as described by the court, was somewhat confusing. This endorsement was written to include as an additional insured, "the person(s) or organization(s) shown in the Schedule, but only with respect to bodily injury, property damage or personal and advertising injury caused, in whole or in part, by 1. Your (elevator company) acts or omissions; or 2. The acts or omissions of those acting on your behalf in the performance of your ongoing operations for the additional insured(s) at the location(s) designated above." So far, coverage was available to the additional insured for its partial fault. However, the court also mentioned that the endorsement specifically applied solely to the negligent acts, errors or omissions of the named insured, which contradicted the language in the first part of the endorsement. How the endorsement might have read did not matter, since, in the words of the court, the property management company seeking additional insured coverage did not meet the causation requirement of the general liability policy. In other words, coverage might have applied had the named insured (elevator company) been negligent, but there were no such allegations of fault.
In the final analysis, the insurer of both the OCP and CGL policies had no obligation to provide defense or indemnity in this action.
The OCP Policy's Second Coverage
As mentioned, the OCP policy is ideal for claims involving property damage to the property of others occurring while work is in progress given that this policy provides no completed operations coverage. But that is not the end of the matter. To this point, only one of the OCP policy's coverages has been discussed, and there is another one. The second coverage, however, applies only when the policy's named insured is performing general supervision of the work and negligently causes injury; in other words, when the named insured is solely at fault. Considering that owners do not normally supervise the work of contractors, this second coverage typically is the general contractor's role and is important only to the extent responsibility for the general supervision of the work is accepted by the general contractor. It is not common, furthermore, to see cases where this second coverage is triggered under the OCP policy. This is not to downplay the significance of this second coverage because it is important, but it is not often triggered.
Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result. But:
(1) The amount we will pay for damages is limited as described in Section III – LIMITS OF INSURANCE; and
(2) Our right and duty to defend end when we have used up the applicable limit of insurance in the payment of judgments or settlements
No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under SUPPLEMENTARY PAYMENTS.
b. This insurance applies to "bodily injury" and "property damage" only if:
(1) The "bodily injury" or "property damage" is caused by an "occurrence" and arises out of:
(a) Operations performed for you by the "contractor" at the location specified in the Declarations; or
(b) Your acts or omissions in connection with the general supervision of such operations;
(2) The "bodily injury" or "property damage" occurs during the policy period; and
(3) Prior to the policy period, no insured listed under Paragraph 1. of Section II—Who Is An Insured and no "employee" authorized by you to give or receive notice of an "occurrence" or claim, knew that the "bodily injury" or "property damage" had occurred, in whole or in part. If such a listed insured or authorized "employee" knew, prior to the policy period, that the "bodily injury" or "property damage" occurred, then any continuation, change or resumption of such "bodily injury" or "property damage" during or after the policy period will be deemed to have been known prior to the policy period.
c. "Bodily injury" or "property damage" which occurs during the policy period and was not, prior to the policy period, known to have occurred by any insured listed under Paragraph 1. of Section II—Who Is An Insured or any "employee" authorized by you to give or receive notice of an "occurrence" or claim, includes any continuation, change or resumption of that "bodily injury" or "property damage" after the end of the policy period.
d. "Bodily injury" or "property damage" will be deemed to have been known to have occurred at the earliest time when any insured listed under Paragraph 1. of Section II—Who Is An Insured or any "employee" authorized by you to give or receive notice of an "occurrence" or claim:
(1) Reports all, or any part, of the "bodily injury" or "property damage" to us or any other insurer;
(2) Receives a written or verbal demand or claim for damages because of the "bodily injury" or "property damage"; or
(3) Becomes aware by any other means that "bodily injury" or "property damage" has occurred or has begun to occur.
e. Damages because of "bodily injury" include damages claimed by any person or organization for care, loss of services or death resulting at any time from the "bodily injury".
Analysis:
Most of this insuring agreement mirrors that found on the general liability (CGL) coverage form; for information on this, see CGL Coverage Form—Coverage A. What makes this insuring agreement different from the one on the CGL form is paragraph b.
In paragraph b., the insuring agreement expresses the scope of owners and contractors protective liability coverage. The coverage applies to bodily injury (BI) or property damage (PD) that arises out of operations performed for the named insured by the designated contractor, or that arises out of the named insured's acts or omissions in connection with the general supervision of such operations. As such, the named insured has coverage for a claim against it, whether that claim is based on an active or a passive operations role of the named insured.
Example 1: The contractor is building a structure on land owned by the named insured and a passer-by is injured by the contractor's operations. In this case, the OCP form of the land owner will provide coverage for the owner if the injured party makes a claim; this is so even though the named insured takes no part in the operations of the contractor and is sued by the injured party simply because of ownership of the property where the occurrence took place. The named insured could be covered under the contractor's liability policy, of course, but by having its own liability protection, the named insured has more control and knowledge of its coverage.
Example 2: The named insured is a general contractor or a land owner with general supervisory control over the operations. In this case, the OCP form will provide liability coverage for the named insured, whether that supervisory control is active or passive.
The current OCP form also has the prior knowledge paragraphs that have been made part of the CGL coverage forms due to the Montrose decision. For an analysis of these paragraphs, CGL Coverage Form—Coverage A.
Exclusions
The exclusions section of the OCP form is similar to the exclusions section on the CGL form; however, the exclusions discussed below are unique to the OCP form.
Note that the OCP form has no exclusions concerning autos, watercraft, or aircraft; thus, the insured is protected for liability resulting from the use of such vehicles that can be found within the scope of activities described in the OCP form's insuring agreement. In connection with this, the mobile equipment exclusion on CG 00 09 has deleted the reference to injury or damage arising out of the transportation of mobile equipment by an auto owned or operated by any insured; therefore, if the insured general contractor has a subcontractor transporting a bulldozer at a specified location on board a truck owned by the insured and an injury somehow arises out of that transportation, CG 00 09 will offer the insured liability coverage should a claim be made.
Also, the liquor liability exclusion that is in the CGL form is not in the OCP form.
c. Work Completed or Put to Intended Use
This insurance does not apply to "bodily injury" or "property damage" which occurs after the earlier of the following times:
(1)When all "work" on the project (other than service, maintenance, or repairs) to be performed for you by the "contractor" at the site of the covered operations has been completed; or
(2)When that portion of the "contractor's" "work", out of which the injury or damage arises, has been put to its intended use by any person or organization, other than another contractor or subcontractor working directly or indirectly for the "contractor" or as part of the same project.
Analysis:
The effect of this exclusion is to restrict OCP coverage to operations in progress; this is not a completed operations coverage form. Once the work is completed, the named insured will have to look to another liability policy for protection. If the named insured is the property owner, a premises and operations liability policy (the CGL form) will respond to claims; if the named insured is a general contractor, the appropriate source of insurance coverage would be the general contractor's own completed operations liability coverage form.
d. Acts or Omissions by You and Your Employees
This insurance does not apply to "bodily injury" or "property damage" arising out of your, or your "employees", acts or omissions other than general supervision of "work" performed for you by the "contractor".
Analysis:
This exclusion is more of a reinforcement of the OCP insuring agreement than a limitation on coverage. Any act or omission of the named insured falling outside the supervisory role as discussed in the OCP insuring agreement is more properly a subject of the insured's premises and operations general liability insurance.
g. Damage to Property
This insurance does not apply to "property damage" to:
(1) Property you own, rent, or occupy, including any costs or expenses incurred by you, or any other person, organization or entity, for repair, replacement, enhancement, restoration or maintenance of such property for any reason, including prevention of injury to a person or damage to another's property;
(2) Property loaned to you;
(3) Personal property in the care, custody or control of the insured; or
(4) "Work" performed for you by the "contractor".
Analysis:
This exclusion is similar to the general liability exclusion j. Damage to Property, but here, paragraph (4) replaces the sections of the exclusion on the CGL form that discuss "that particular part". This exclusion confirms that certain property damage is not covered by a liability policy, since such property should be covered by a property policy. Paragraph (4) simply makes the point that the contractor hired by the named insured should be knowledgeable about his or her business and if that contractor damages his or her own work, this liability policy will not pay for the damage; this is a typical business risk exclusion.
The OCP damage to property exclusion does not include the provision pertaining to premises that the named insured sells, gives away, or abandons, that is found in the general liability form. Also, this exclusion has no reference to the products-completed operations hazard, because the OCP policy limits its coverage to ongoing operations.
Supplementary Payments
- We will pay, with respect to any claim we investigate or settle, or any "suit" against an insured we defend:
h. Expenses incurred by the insured for first aid administered to others at the time of an accident, for "bodily injury" to which this insurance applies.
Analysis:
The supplementary payments section of CG 00 09 mirrors that of the CGL with the exception of paragraph h. This paragraph pays the insured for expenses incurred for first aid given to injured parties; since the OCP form does not have any medical payments coverage, this supplementary payment takes the place of such coverage to a certain degree. First aid payments, like the other supplementary payments, do not reduce the limits of insurance.
For more information on supplementary payments, see General Provisions of the CGL.
Who Is an Insured
This section of CG 00 09 is similar to the section in the CGL form. Individuals, spouses, partnerships, joint ventures, limited liability companies, corporations, executive officers and directors, and stockholders can all be considered insureds under the OCP form. What is noteworthy here is that employees are not considered insureds under the OCP form. If an owner or a contractor is the insured on CG 00 09 and wants liability coverage for their employees, that owner or contractor should consider a CGL form or some other type of liability policy.
Limits of Insurance
This section of the OCP form is similar to that found on the CGL form; see General Provisions of the CGL. The limits of insurance under the OCP form are stated in aggregate terms and each occurrence terms. Unique to owners and contractors protective liability coverage is the statement that, "if you designate more than one project in the Declarations, the Aggregate Limit shall apply separately to each project". What this means is if the named insured has five projects specified in the declarations where operations are being performed and has an aggregate limit of $5 million, each project has an available aggregate limit of $5 million. This does not mean that the insured has a total of $25 million available for claims, but that the insured has up to $5 million for each project.
As examples, if the insured has a loss at project #1 for $2 million, that is covered for the total amount; if the insured has a loss at project #1 for $2 million and a loss at project #2 for $4 million, those are both covered for the total amounts; if the insured has a loss at project #1 for $6 million and a loss at project #2 for $2 million, only $5 million of the loss at project #1 is covered, but the entire $2 million loss at project #2 is covered. How the aggregate is used is, of course, subject to the circumstances of the losses, applicable exclusions, and the each occurrence limit (among other things). However, the total of the per project aggregates cannot be added together and used at any one project; the per project general aggregate amount is available separately to each project.
Conditions
2. Cancellation
a. The first Named Insured shown in the Declarations may cancel this policy by mailing or delivering to us advance written notice of cancellation.
b. We may cancel this policy by mailing or delivering to the first Named Insured and the "contractor" written notice of cancellation at least:
(1) ten days before the effective date of cancellation if we cancel for non-payment of premium; or
(2) thirty days before the effective date of cancellation if we cancel for any other reason.
c. We will mail or deliver our notices to the first Named Insured's and the "contractor's" last mailing address known to us.
d. Notice of cancellation will state the effective date of cancellation. The policy period will end on that date.
e. If this policy is cancelled, we will send the "contractor" any premium refund due. If we cancel, the refund will be pro rata. If the first Named Insured cancels, the refund may be less than pro rata. The cancellation will be effective even if we have not made or offered a refund.
f. If notice is mailed, proof of mailing will be sufficient proof of notice.
Analysis:
This condition points out the importance of the "contractor" in the OCP policy. If the insurer cancels the policy, it will send notice to not only the first named insured but also to the contractor. Furthermore, if the policy is cancelled, the insurer sends any premium refund to the contractor since the contractor is the one that has the obligation to obtain the policy (for the benefit of others) and to pay the premium. "Contractor" is a term that is defined on CG 00 09 and this definition is discussed below.
3. Changes
This policy contains all the agreements between you, the "contractor" and us concerning the insurance afforded. The first Named Insured shown in the Declarations and the "contractor" are authorized to make changes in the terms of this policy with our consent. This policy's terms can be amended or waived only by endorsement issued by us and made a part of this policy.
Analysis:
Condition3. states strongly that the insurer does not want the OCP policy to be subject to some side agreement or building contract between the named insured and the contractor; coverage under the OCP policy is to be governed by that policy's terms and not some outside contract. This condition does allow the first named insured and the contractor to change the terms of the OCP policy, but only with the consent of the insurer.
5. Examination Of Your Books And Records
We may examine and audit your books and records as well as the "contractor's" books and records as they relate to this policy at any time during the policy period and up to three years afterward.
Analysis:
This condition allows the insurer to check books and records so that it is aware of some of the exposures that may have an impact under the OCP policy. The insurer can also use this condition to help it come up with a premium that is adequate to cover those exposures.
6. Inspections And Surveys
a. We have the right to:
(1) Make inspections and surveys at any time;
(2) Give you reports on the conditions we find; and
(3) Recommend changes.
b. We are not obligated to make any inspections, surveys, reports or recommendations and any such actions we do undertake relate only to insurability and the premiums to be charged. We do not make safety inspections. We do not undertake to perform the duty of any person or organization to provide for the health or safety of workers or the public. And we do not warrant that conditions:
(1) Are safe or healthful; or
(2) Comply with laws, regulations, codes, or standards.
c. Paragraphs a. and b. of this condition apply not only to us, but also to any rating, advisory, rate service or similar organization which makes insurance inspections, surveys, reports or recommendations.
d. Paragraph b. of this condition does not apply to any inspections, surveys, reports or recommendations we may make relative to certification, under state or municipal statutes, ordinances or regulations, of boilers, pressure vessels or elevators.
Analysis:
This condition complements the previous condition and allows the insurer to make inspections and surveys to check out the exposures facing the insureds that could affect CG 00 09. Also, the inspections and surveys help the insurer determine an adequate premium. The policy makes clear that the insurer does not take upon itself the role of safety inspector or loss control/risk manager. Some courts have held that just because the insurer inspects the insured's premises or operations, that the insurer has then taken on a duty to make sure that all exposures and possibilities of loss will be fixed; then, if a loss does occur, the insured can sue the insurer for a faulty loss control inspection, a breach of the duty assumed by the insurer toward the insured. This condition should correct that judicial misconception.
8. Other Insurance
The insurance afforded by this Coverage Part is primary insurance and we will not seek contribution from any other insurance available to you unless the other insurance is provided by a contractor other than the designated "contractor" for the same operation and job location designated in the Declarations. Then we will share with that other insurance by the method described below.
If all of the other insurance permits contribution by equal shares, we will follow this method also. Under this approach, each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first.
If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers.
Analysis:
This condition means that a named insured property owner's OCP coverage is primary coverage and will pay before the owner's own premises and operations liability insurance, even though the premises liability is primary also; the OCP carrier even pledges not to seek contribution from the premises liability insurer.
There is no talk of excess insurance in CG 00 09. However, other insurance, such as an additional insured endorsement written in conjunction with an OCP policy, can be an issue with regard to this particular condition.
9. Premiums
The "contractor":
a. Is responsible for the payment of all premiums; and
b. Will be the payee for any return premiums we pay.
Analysis:
This condition is fairly clear—the contractor is supposed to pay the premium and the contractor is supposed to get any return premium. The contractor, in effect, takes the place of the first named insured when it comes to the premium, whether the premium be the advance premium or the after-audit premium. The status of the contractor and the nature of the coverage under the OCP policy is reflected by this condition.
Definitions
This section of the OCP form has 16 definitions, most of which are the same as those on the CGL form; see Commercial General Liability Definitions for more information.
There are some definitions on the CGL form that are not on the OCP form and there are some definitions that are different. For example, the OCP form does not have any definition of "personal and advertising injury". Further, the OCP form declines to declare what an "insured contract" for a lease of premises does not include; further, the part of the insured contract definition on the CGL form that deals with "that part of any other contract or agreement pertaining to your business … under which you assume the tort liability of another party …." is not in the OCP policy. (It is not the intent of the OCP policy to provide contractual liability insurance, but only liability for injury or damage emanating while operations are in progress by the contractor for the policy's named insured.) Finally, "work" is defined in CG 00 09 to include "materials, parts or equipment furnished in connection with the operations"; there is no discussion here of work or operations performed on behalf of the named insured or of warranties of fitness or quality.
There is one definition on the OCP form that must be noted—contractor.
3. "Contractor" means the contractor designated in the Declarations.
Analysis:
Considering the duties and importance of the contractor under the OCP policy, this definition is rather simple. Whoever is named in the declarations as the contractor meets the terms of the definition. This person or organization purchases the coverage to protect the named insured and is specifically mentioned in the insuring agreement, some exclusions, and some of the conditions on CG 00 09.
Endorsements
The optional endorsements available for use with the current OCP coverage form are briefly described here.
Additional Insured—Engineers, Architects or Surveyors—CG 20 31 12 19
This endorsement may be required in order to add the OCP policy's named insured's professionals to cover liability for their nonprofessional acts or omissions that result in bodily injury or property damage. This endorsement is identical in purpose to the additional insured endorsement CG 20 07 issued to these professionals in relation to the CGL policy. A difference is that endorsement CG 20 31 does not apply to personal and advertising injury, since such coverage is not in the OCP policy. The latest edition of CG 20 31 contains the same changes that affect other additional insured endorsements; that is, coverage is limited to the professional's partial fault, to the extent otherwise permitted by law, and if such coverage as provided is required by a contract or agreement. If coverage provided to these additional insureds is required by a contract or agreement, the most the insurer will pay on behalf of such additional insured is the amount of insurance: (1) required by the contract or agreement; or (2) available under the limits of insurance, whichever is less. To ensure this endorsement does not cover professional liability, it also specifically excludes bodily injury or property damage arising out of the rendering or failure to render professional services of the kind stated therein. As with most other CGL exclusions, the exclusion applies even if the claims against any insured allege negligence or other wrongdoing involved in employment related matters of such services.
Earlier Notice of Cancellation Provided By Us—CG 28 04 10 93
When the OCP policy is cancelled for any reason other than nonpayment of premium, the number of days is prescribed by statute. If the insurer decides to increase the number of days notice, perhaps to accommodate a named insured's placement elsewhere, this endorsement needs to be issued to change the policy's number of days notice to what is designated in this endorsement.
Personal Injury Liability—CG 28 05 10 01
This endorsement adds personal injury liability coverage to the owners and contractors protective liability form. Personal injury is defined on the endorsement as "injury, including consequential bodily injury, arising out of the offenses of false arrest, detention, or imprisonment." The 1998 definition of personal injury differs from the previous form's definition by including consequential bodily injury within the coverage. The 1996 endorsement excluded coverage under the endorsement for all bodily injury. As in the previous edition of the endorsement, this version of personal injury coverage does not include certain offenses that are covered under the personal injury liability section of the CGL forms. However, it does allow coverage under the OCP form for personal injury caused by an offense arising out of operations performed for the named insured by the contractor designated in the declarations.
Principals Protective Liability Coverage—CG 28 07 04 13
This endorsement replaces the entire insuring agreement on coverage for bodily injury and property damage liability under CG 00 09, deleting all references to property damage. The insuring agreement under CG 28 07 applies to those sums that the insured becomes legally obligated to pay as damages for bodily injury sustained by any person while engaged as an independent contractor or as an employee of an independent contractor while performing operations for the named insured (Coverage A). The agreement also applies to bodily injury sustained by any person arising out of the activities of any independent contractor or an employee of the independent contractor while engaged in operations for the named insured (Coverage B).
In brief, Coverage A is to respond if an independent contractor or his employee is injured while doing work for the named insured and then seeks damages from the insured based on the insured's alleged negligence; this is not akin to workers compensation since the endorsement clearly states that "all persons engaged in the operations to which this insurance applies are deemed independent contractors or employees of independent contractors" and not employees of the named insured. Coverage B is to respond if the independent contractor or his employee injures a third party while doing work for the named insured and that third party sues the named insured based on the insured's alleged negligence.
CG 28 07 also replaces the exclusions on CG 00 09 with its own set of exclusions. The conditions section of CG 00 09 is also amended to some degree by CG 28 07; some are replaced and other new conditions are added. Note that this endorsement also amends the definitions section of the OCP form; some are deleted and one is added.
Pesticide or Herbicide Applicator Coverage—CG 28 12 04 13
This endorsement deletes a part (paragraph 1.d.) of the OCP pollution exclusion with respect to operations scheduled on the endorsement if two conditions are met: (1) the operations are conducted away from premises owned or rented by the named insured; and (2) the operations meet all standards of any statute, ordinance, regulation, or license requirement of any federal, state, or local government having application to those operations.
Additional Insured – State or Governmental Agency or Subdivision or Political Subdivision – Permits or Authorizations—CG 29 35 12 19
This endorsement amends section II (who is an insured) of the OCP coverage form to include as an insured any state or governmental agency or subdivision or political subdivision shown in the schedule. The insurance under CG 29 35 applies only with respect to operations performed by the named insured or on behalf of the named insured for which the state or governmental agency or political subdivision has issued a permit or authorization. The insurance does not apply to bodily injury or property damage arising out of operations performed for the federal government, state or municipality, or damages included within the products-completed operations hazard.
Employment-Related Practices Exclusion—CG 29 51 12 07
This endorsement, in excluding liability for bodily injury arising out of employment-related practices, is virtually the same as exclusion CG 21 47 that is used with the CGL form. The only difference is that the endorsement for use with the OCP policy does not contain the section on personal injury since this coverage does not apply under the OCP policy.
Waiver of Transfer of Rights of Recovery Against Others to Us—CG 29 88 12 19
The transfer of rights clause in the conditions section of CG 00 09 dictates that, if the insured has rights to recover all or part of any payment that the insurer has made under the coverage form, those rights are transferred to the insurer. CG 29 88 amends this clause by adding a waiver of rights on the part of the insurer with respect to the person or organization shown in the schedule of the endorsement. In other words, if the insurer is willing to waive its rights of recovery under the OCP form against an entity for whatever reason, endorsement CG 29 88 is the form to use.
Construction Project Management Protective Liability Coverage—CG 31 15 04 13
This endorsement changes the insuring agreement of the OCP coverage form. CG 31 15 declares that the insurance applies to BI and PD only if the BI or PD is caused by an occurrence and arises out of: operations performed by or for the contractor in connection with the designated construction project; or, acts or omissions of the insured in connection with the general supervision of such operations performed by others. Basically, CG 31 15 provides the OCP coverage for operations performed by or for the contractor as opposed to operations performed for the named insured by the contractor, as the OCP coverage form provides. CG 31 15 also revises several exclusions to reflect the changed insuring agreement.
This endorsement adds a professional services exclusion to the OCP coverage form, and includes a definition for the professional services. The professional services exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, or monitoring of others by that insured, if the occurrence involved the rendering or failure to render professional services as described in this endorsement.
The definition of contractor in this endorsement is that shown in the schedule of the endorsement, so leaving this out of the schedule could definitely pose coverage problems.
Finally, since CG 31 15 deals with designated construction projects, this term is also defined. It simply means the construction project described in the schedule of the endorsement at the specified location.
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Original publication: December 5, 2013
Reviewed and updated: May 16, 2023