July 15, 2002

INSURANCE INFORMATION NOTICE NO. 2003-1

SUBJECT: Insurance Requirements in Contracts Manual

Optional Reduction for Owners Protective Liability

(Previously referred to as Owners and Contractors Protective Liability (OPL))

In the Procedures Manual for Insurance Requirements in Contracts and Indemnification Agreements, Supplement 1 recommended that Owners and Contractors Protective Liability Insurance be required for all new construction and renovation projects. This coverage is no longer referred to as Owners and Contractors Protective Liability. It is now called Owners Protective Liability coverage. It is purchased by the contractor to provide coverage for the owner of the project only. It does not provide any coverage for the contractor.

The Office of Risk Management (ORM) is now recommending that for contracts $50,000 or less, this requirement can be waived, only if the contract requirements continue to require proof of Commercial General Liability coverage with the State of Louisiana, all State departments, agencies, boards and commissions added as an additional insured. This exception does not apply to road construction projects, demolition projects, or other hazardous operational contracts. In these types of cases, it is important to continue to require Owners Protective Liability from the contractor even if the contract is less than $50,000.

As many of you are aware, insurance premiums have increased drastically for all lines of coverage. The poor economy reduced the insurance companies investment income and insurance losses have skyrocketed in the past couple of years. If the insurance industry premiums decrease for this coverage in the future, ORM will withdraw the above recommendation.

For an in-depth explanation of the coverage provided by an OPL policy, please refer to the Procedures Manual for Insurance Requirements in Contracts, page 19, on the ORM website at the following address:

http://doa.louisiana.gov/orm/uwcontr.pdf

If you have any questions on the above, please contact Tommy Arbour at (225) 342-8472 or Melissa Harris at (225) 342-8414.