Estate of Pitts: Downstream OCIP Coverage

April 1, 2014

Contractors who agree to abide by minimum coverage requirements on an Owner's Controlled Insurance Policy ("OCIP") may at the same time be unwittingly agreeing to provide insurance for all down-stream contractors and subcontractors on a project, according to some recent Georgia court decisions. A general contractor unsuccessfully appealed a judicial decision holding the general contractor liable to an injured worker of a subcontractor on the project under the OCIP policy. Specifically, at the commencement of the project, the general contractor entered into an OCIP policy with the City of Atlanta, the purpose of which was to "provide one master insurance program that provides broad coverage with high limits that will benefit all participants involved in the project." After the worker was accidentally killed on the project by work being performed by another subcontractor, his estate sued the general contractor seeking to recover the balance of his judgment because the responsible subcontractor could not pay the wrongful death judgment. The Georgia Court of Appeals concluded that because OCIP policy applied to "all participants"- it included all people participating in the airport terminal construction project in any capacity, and by extension, the deceased. Despite the general contractor's position that "participants" meant only the companies participating in the OCIP program, not participants on the construction of the project, the Georgia Court of Appeals read the policy differently. The ruling is a signal to all entering master policies, or indeed any project liability policy, to read the language of such contracts, confirm the appropriate coverage is obtained by down-stream contractors, and insert a provision in all insurance policies limiting coverage to only those corporate entities signing such contracts. The economic threat to contractors, where insurance is not obtained and the upstream contractor's insurer refuses coverage for the downstream claim, is the payment of the claim directly from the upstream contractor's pocket. The Georgia Supreme Court denied certiorari and the decision by the Georgia Court of Appeals stands as prevailing law. The case is Estate of Pitts v. City of Atlanta, 323 Ga. App. 70 (2013) cert. denied, 2014 Ga. LEXIS 161 (Feb. 24, 2014). For additional questions or inquiries, please call Amy K. Weber at 678.336.7228.    

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