OWNERS AND CONTRACTORS PROTECTIVE LIABILITY COVERAGE FORM SAMPLE INSURANCE PROPOSAL LANGUAGE

(November 2019)

REPRINT PERMISSION

PF&M subscribers in any manual or electronic form are permitted to reprint the following sample insurance proposal language when preparing insurance presentations for their commercial insurance customers. Other uses require permission from The Rough Notes Company, Inc.

PROPOSAL DISCLAIMER

The following paragraph or similar language needs to be included in all insurance proposals:

Consult the policy for definitions and limitations. The terms of this proposal do not represent contract terms. The policy is subject to company underwriting practices.

TIPS FOR USING THIS PROPOSAL LANGUAGE

This proposal language is not intended to be an entire insurance proposal. A client specific section including the name and address of the insured, the insurance company(s) and the agent, and information about them, a list of locations, limits, deductibles, and similar customer specific items are not included and should be prepared.

The intent of any insurance proposal is not to be a reproduction of the insurance policy, but to give a summary of possible coverages.

Paragraphs that explain coverages unique to this coverage form or policy may be the most important addition to your insurance proposal and sales effort. Coverage examples can be tailored to your individual customer. Be careful when altering any proposal language not to expand coverage beyond what the policy intends.

This proposal should be combined with proposals for other lines of business, such as commercial property, commercial general liability, workers compensation, and umbrella liability for a complete account proposal.

Related Articles:

Owners and Contractors Protective Liability Coverage Form Available Endorsements and Their Uses

Owners and Contractors Protective Liability Coverage Form Endorsements Checklist

SAMPLE PROPOSAL LANGUAGE FOR THE INSURANCE SERVICES OFFICE (ISO) OWNERS AND CONTRACTORS PROTECTIVE LIABILITY COVERAGE FORM–COVERAGE FOR OPERATIONS OF DESIGNATED CONTRACTOR

The Owners and Contractors Protective Liability Coverage Form is written as a stand-alone monoline policy and contains its own conditions. It is not written or combined with any other coverage part or policy.

BODILY INJURY AND PROPERTY DAMAGE LIABILITY COVERAGE INSURING AGREEMENT

The insurance company agrees to pay for damages for covered occurrences of bodily injury and property damage that the named insured becomes legally obligated to pay up to the limits of insurance The coverage is limited to occurrences arising from operations the contractor performs for the named insured and the named insured’s general supervision of the contractor’s operations. The occurrence must happen at the designated location.

The insurance company has the right and duty to defend any suit that seeks those damages and, at its option, may investigate or settle any claim or suit at any time. Any obligation to pay ends when the limits of insurance are used up by paying judgments and settlements.

EXCLUSIONS

Exclusions must be examined carefully, because many of them have conditions, exceptions, limitations, or restrictions that not stated below. Coverage does not apply to:

• Expected or Intended Injury

Bodily injury or property damage that is expected or intended by the insured is excluded. The only exception is for bodily injury that results from the insured using reasonable force to protect persons or property.

• Contractual Liability

Bodily injury or property damage in cases where the insured must pay damages based on assuming liability in a written contract or agreement is excluded. Coverage does apply to liability for damages the insured has without a contract or agreement. It also applies for liability it assumed in five specific types of insured contracts or agreements but only if the injury or damage occurs after the contract is executed.

• Work Completed or Put to Intended Use

Bodily injury or property damage that occurs after the designated contractor completes its work on the project is excluded, except for any subsequent service, maintenance, or repair work expected of the contractor.

• Acts or Omissions by You and Your Employees

Bodily injury or property damage that results from any act or omission by the named insured or its employees is excluded, except for general supervision of work the contractor performed for the named insured. This exclusion also applies if the named insured or its employees perform any activities, work, or operations on the project itself, other than supervising the designated contractor.

• Workers Compensation and Similar Laws

Damages that result from any requirement or obligation of the insured imposed by any workers compensation, disability benefits, unemployment compensation, or similar law are excluded.

• Employers Liability

Bodily injury to an employee of the insured that arises out of his or her employment or performance of duties connected with the named insured’s business is excluded. Bodily injury to the spouse, children, parents, brothers, or sisters of that employee as a consequence of the bodily injury to the employee is also excluded. This exclusion applies whether the insured is liable as an employer or in any other capacity, or whether the insured must share damages with or repay someone else who must pay damages because of the injury.

• Damage to Property

Property damage to any property the named insured owns, rents, or occupies is excluded. This exclusion also applies to property loaned to the named insured, personal property in its care, custody, or control, and work the contractor performs for the insured.

• War

Bodily injury or property damage caused in any way by war, undeclared war, and civil war is excluded. This includes warlike action by a military force and actions a government takes to prevent or defend against attacks that involve military personnel or agents. It also includes rebellion, revolution, insurrection, or unlawful seizing of power and actions taken to prevent or defend against these acts.

• Mobile Equipment

Bodily injury or property damage caused when mobile equipment is used to participate in, practice for, or prepare for racing, speed, demolition, or stunt events is excluded.

• Pollution

There is no coverage for bodily injury or property damage that arises out of the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants at or from any premises, site, or location at any time owned, occupied by, rented to, or loaned to any insured. This exclusion also applies to any loss, cost, or expense that arises out of any request, demand, order, law, requirement, claim, or suit by a government entity to respond to or assess the effects of pollutants in any way. This exclusion has numerous exceptions and conditions that must be reviewed carefully and in their entirety in the context of the exclusion.

• Damage to Impaired Property or Property Not Physically Injured

There is no coverage for property damage to impaired property or property not physically injured when the damage is due to a defect, inadequacy, or dangerous condition in the work that the named insured's contractor performs. Coverage also does not apply when the damage is due to the named insured or by any party that acts on its behalf refusing or being late in performing the terms of a contract or agreement. However, this exclusion does not apply to loss of use of other property from sudden and accidental physical injury to work performed by the named insured's contractor.

• Electronic Data

Coverage does not apply to damage to electronic data. Loss of, loss of use of, damage to, corruption of, inability to access, or inability to manipulate electronic data is excluded. However, coverage does apply to liability for damages due to bodily injury. Electronic data is defined as information, facts, or programs used with computer software or any other media used with equipment that electronic devices control.

SUPPLEMENTARY PAYMENTS

• With respect to claims it investigates or settles, or suits against the insured it defends, the insurance company pays: All expenses it incurs to do so
• The cost of bail bonds required because of traffic law violations or accidents as a result of using any motor vehicle that this insurance covers. The cost is limited to $250. The company is not required to furnish these bonds.
• The cost of bonds to release attachments. It pays costs for bond amounts within the limit of insurance. The company is not required to furnish these bonds.
• Reasonable expenses the insured incurs when the insurance company requests assistance to investigate or defend a claim or suit. It pays up to $250 per day if the insured must be away from work.
• Suit-related court costs that are the insured’s responsibility. This does not include attorney fees or expenses that are the insured's responsibility.
• Prejudgment interest on the part of any judgment the insurance company pays that is the insured’s responsibility
• Interest that accrues on the full amount of any judgment after it is entered but before the insurance company pays, offers to pay, or deposits with the court the part of the judgment that is the insurance company's responsibility
• Expenses the insured incurs for first aid administered to others at the time of an accident for bodily injury that this insurance covers

None of these payments reduce the limits of insurance.

If the insurance company defends an insured against a suit and an indemnitee of the insured is also named as a party to the suit, the insurance company also defends the indemnitee. This is subject to a number of conditions on and requirements of the indemnitee.

The insurance company's obligation to pay Supplementary Payments ends when the limit of insurance is used up paying judgments or settlements.

WHO IS AN INSURED

If named or designated as an insured on the declarations:

• Individual. The individual and the individual's spouse are insureds.
• Partnership or joint venture. The partnership and the joint ventures are insureds. Members and partners of the insured and their spouses are also insureds but only with respect to their duties as partners or members of the joint venture.
• Limited liability company. The limited liability company is an insured. Members of the company are also insureds but only to the extent of their duties as members of the limited liability company. The named insured's managers are also insureds but only to the extent of their duties as managers.
• Any other organization. The organization is an insured. Executive officers and directors are also insureds but only to the extent of their duties as such. Stockholders are also insureds to the extent of their liability as stockholders.

The following are also insureds:

• Any party that acts as the named insured's real estate manager
• Any party that has proper temporary custody of insured property if the named insured dies
• The named insured's legal representative if the named insured dies, with respect to the duties as such

LIMITS OF INSURANCE

The limits apply separately to each consecutive annual period and to any remaining period of less than 12 months. This begins with the inception date on the declarations, unless extended after issuance for any additional period of less than 12 months. If that occurs, the additional period is treated as part of the last preceding period in order to determine the limits of insurance.

• The most the insurance company pays are the limits of insurance on the declarations. This is regardless of the number of insureds, claims made, suits brought, or number of parties that make claims or bring suits.
• The most the insurance company pays for all bodily injury and property damage from any one covered occurrence is the Each Occurrence Limit on the declarations. This is subject to the Aggregate Limit.
• The most the insurance company pays for the total of damages for all bodily injury and property damage is the Aggregate Limit on the declarations. If there is more than one project listed on the declarations, the Aggregate Limit applies separately to each designated project.

CONDITIONS

• Bankruptcy

The insurance company is not relieved of its obligations if the insured or its estate becomes bankrupt or insolvent.

• Cancellation
• The first named insured on the declarations can request cancellation at any time.
• The insurance company must provide written notice of cancellation to both the first named insured and the contractor. The notice periods are ten days for non-payment of premium and 30 days for any other reason.
• The notice must be mailed or delivered to the last known mailing addresses of the named insured and the contractor. It must contain the date of cancellation. Proof of mailing is sufficient proof of notice.
• Changes

Either the contractor or the named insured can request changes. Those changes do not become effective until the insurance company agrees to them and issues the corresponding change endorsement to the policy.

• Duties in the Event of Occurrence, Offense, Claim, or Suit

The named insured must perform certain duties if a claim or demand for coverage occurs:

• Inform the insurance company as soon as possible of any occurrence that may result in a claim. Include how, when, and where the event took place and the names and addresses of all injured parties and any witnesses and the type and location of any injury or damage.
• Immediately record the details of any claim or suit, the date it was received, notify the insurance company as soon as possible, and provide it with written notice of the claim or suit on a timely basis.

• Send the insurance company copies of all legal papers received in connection with a claim or suit and authorize it to obtain any pertinent records or other information it needs. Cooperate with the company as it investigates and settles claims or suits and help it enforce any rights of recovery against other parties that may be liable for the injury or damage.
• Do not make any voluntary payments, assume any obligations, or incur any expense (except first aid expenses) without the insurance company's written consent. Such payments are not usually repaid. Any payments made (other than first aid) without the insurance company's consent are done at the named insured own cost or expense.
• Examination of Your Books and Records

The insurance company may examine and audit the books and records of the contractor and the named insured any time during the policy period and for up to three years after expiration. Only relevant material can be examined.

• Inspections and Surveys
• The insurance company may make inspections and surveys at any time, but it is not required to do so. It also is not required to make any party one aware of health safety violations.
• Legal Action Against Us
• No person or organization has the right to include the insurance company as a party to a suit that seeks damages from an insured or to sue it with respect to this coverage form until all its terms are met. The company may be sued, but it is not liable for damages that this coverage form does not require be paid or that exceed the limit of insurance that applies.
• Other Insurance

This coverage is primary insurance. The insurance company cannot seek contribution from any other insurance unless a different contractor than the one on the declarations provides it to the named insured for the same operation and job location. It then shares with the other insurance on the basis of one of two options.

• If the other policy permits contribution by equal shares, this insurance does as well.
• If the other policy does not include contribution by equal shares, contribution is by limits.
• Premiums

The contractor pays the premiums and also receives any return premiums.

• Premium Audit

Premiums are calculated based on the insurance company's rules and rates. Advance or deposit premiums are subject to audit and adjustment at the close of each audit period. If the advance premium is less than the audit earned premium, the contractor pays the difference. If the advance premium is more than the audit earned premium, the insurance company returns the difference to the contractor. The contractor must keep records of the information the insurance company needs for the audit and the premium calculations and send copies to the company when it requests them.

• Separation of Insureds

Insurance applies as if each named insured is the only named insured and separately to each insured subject to a claim or suit. This condition does not apply with respect to the limits of insurance and any rights or duties specifically assigned to the first named insured.

• Transfer of Rights of Recovery Against Others to Us

Any rights the insured has against others to recover all or part of any payment the insurance company made transfer to the insurance company. The insured must preserve those rights and not do anything after the loss occurs to impair them. The insurance company can request that the insured bring suit or transfer those rights to it and help it enforce them.

• When We Do Not Renew

The insurance company must notify the named insured 30 days prior to the expiration date of its intent to not renew coverage.

DEFINITIONS

Refer to the coverage form for a list and description of definitions.