An Owner’s Interest liability insurance policy, as the name suggests, protects the owner’s interest as a property owner. Customers often ask if they could get away with purchasing an Owner’s Interest insurance policy and instead rely on being named as additional insured on the GC’s (General Contractor) insurance policy to cover any claims made against the owner. An Owner’s Interest policy can be expensive especially in high risk states such as New York.
Being named as additional insured on your GC’s insurance policy is an absolute must, as is reviewing their insurance policy in full. Many GC policies are full of limitations and exclusions that all it really covers is a slip and fall. Yet, we insist that our clients not rely solely on being additional insured on your GC’s policy and obtain their own Owners Interest policy. Some of the reasons you should not rely on additional insured status for are:
You have no control over the GC’s exposures, if the GC is sued by another customer and their insurance company pays out the full limits of their policy, you have $0 insurance coverage left because the GC exhausted their insurance limits. This happens more often than we would hope for, GC’s typically have multiple jobs going at once and you have no control over the GC risk control, operations or when he gets sued. In fact, he may have multiple pending claims against his policy before you even hire the GC.
You have no control over the GC’s policy coverage, they may show you the policy and certificate with no labor law exclusion on their policy, yet a month later they can endorse the policy to remove the most important coverage you need and you would not know about it. Yes this happens.
An Owner’s Interest policy also can be designed to cover products-completed operations claims that take place after the project is completed and after the policy expires. An Extended Completed Operations coverage endorsement added to the policy lengthens the period of coverage for completed operations for several years after project completion, often matching a state’s statute of repose timeframe for suits against the owner for completed work.
A Contractor’s General Liability policy will typically only include the Owner as an Additional Insured – for actions related to the operations of the contractor; however, the Owner will very rarely have coverage as a Named Insured under the contractor’s policy. The Owner’s Interest policy is critical to ensure the Owner has coverage for actions not the direct responsibility of the GC.
- Property owners are responsible to maintain a safe environment so that people who come onto the property don’t suffer an injury. This responsibility is known as “premises liability,” which holds property owners liable for accidents and injuries that occur on their property, not the GC. The types of incidents that may result in premises liability claims can range from a slip and fall on a public sidewalk to an injury suffered on an amusement park ride. For example, a courier delivering a package may sue you for injuries if he slips and falls on an oil slick in the driveway.