Owners and Contractors Liability Insurance Policy Definition


Liability insurance is very common among businesses, especially those that deal directly with clients and perform work on their properties or possessions. One popular type is known as OCP, or owners and contractors liability insurance. This type of insurance is created when a contractor, such as a construction company, agrees to perform a particular activity for the owner of a property, such as a building project. This should not be confused with a surety bond, which is an instrument used to ensure that a contractor fulfills the requirements of the project.


Owners and contractors liability insurance is actually a limited type of insurance that applies only to a single insured party; the owner that hires the contractor in the first place. This policy protects the owner from liability and involves the operations of an independent contractor which others may otherwise be able to sue the owner for, despite the owner's direct lack of involvement. It may also be called independent contractor insurance.

Vs. General Liability

OCP should not be confused with general liability insurance that many businesses use. These liability policies help protect the businesses themselves, including contractors, and not owners that hire the businesses. General liability will offer similar coverage if a third party tries to sue the contractor or if the owner sues the contractor for damages, not if a party sues the owner.


Owners do not purchase OCP themselves. Instead, contractors purchase it, usually as part of the contract that both parties agree to. Owners will require OCP if the project is open to the risk of third party lawsuits, such as a walkway constructed around many other people not connected with the project. The contractor purchases this insurance and ensures that it will last as long as the project is ongoing -- the policy lists a designated contractor and project that it applies to alone.

Coverage Areas

OCP usually defines coverage very specifically. It covers only bodily injury and property damage that result from contractor operations. According to the policy, this typically includes both acts and omissions of the owner as far as the owner is involved in the project and helps the contractor finish the job. The policy has fund limitations and may put constraints on individual occurrences that will or will not be covered.

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