Congratulations, you have decided to embark upon a self storage development project! You’ve secured the financing, contractors, site planning, design, and more.
But what about insurance?
In the litigious society we live in, it is important to make sure you are protected from the exposures of a construction site. There are a number of different insurance options for self storage owners and developers to choose from. Many owners have a false sense of security by relying on contracts and insurance certificates from contractors. It is important to make sure you are protected as the owner and developer of a large asset.
To help decide which is best for you and your project, here are a few of the most common options from the most limited coverage to the broadest.
Additional Insured (AI) on the General Contractor’s (GC) Policy
Even with AI status and Hold Harmless agreements in favor of the project owner, this option has a number of drawbacks.
- The owner relies on the GC’s limits. There are no dedicated insurance limits of their own.
- The GC’s limits could be exhausted on a different project, leaving no coverage for the entirety of your project.
- The insured’s sole negligence is likely not covered.
- Depending on the state or circumstance, contributory negligence may not be covered.
Owners & Contractors Protective (OCP)
This option provides dedicated insurance limits to the project owner and is usually bought by the General Contractor on behalf of the project owner.
- Intended to cover the owner for negligence of the GC.
- Should be written in conjunction with the GC’s General Liability Policy.
- No coverage for sole negligence of the insured.
- No contractual liability.
- May not cover contributory negligence.
Commercial General Liability (CGL) Policy
Usually written as a project specific policy, a project owner can buy a full CGL policy which has the broadest coverage options of the three.
- Dedicated insurance limits including premises, contractual, products, and competed operations coverage.
- Primary coverage for sole negligence.
- Excess coverage over the GC for vicarious liability.
- Option to add extended products completed operations which is important if you are selling the building within the statute of limitations.
Knowing your insurance options and working with a specialized agent to help walk you through the process will allow you to make an informed decision to protect your self storage development project.