How much do you know about providing railroad protective liability coverage to your contractor clients?

If you answered “very little,” you’re not alone. Even though this niche falls under the broader umbrella of general liability insurance and forms are standardized based on the requirements of the Railroad Insurance Management Association, securing a railroad protective liability policy is not necessarily a walk in the park.

Here’s what to keep in mind if one of your commercial clients is planning to work within 50 feet of a railroad.

Exposure 101

For starters, because a railroad protective liability policy protects the railroad itself and not the contractor who is completing work near the site, clients purchasing this type of coverage must also purchase a commercial general liability policy to protect themselves in the event that the work causes bodily injury or property damage.

“This type of insurance does not offer any protection to the contractor,” explains Cate Whiddon, vice president and railroad practice leader at ACE Westchester. “It’s purchased solely to protect the railroad. A lot of times there’s confusion because the contractors believe if they purchase a railroad protective policy that protects the railroad, they’re covered.”

Whiddon says it’s the most common conversation she has with agents and brokers: “They have to remember the policy does not cover the contractor, so they also have to look to the general liability policy to make sure there’s nothing in that policy that would narrow the coverage,” she explains.

What might that entail? “Typically they have to make sure there’s no contractual exclusion for work within 50 feet of the railroad tracks,” Whiddon explains, noting the ISO endorsement that affords that coverage is ISO CG 24 17. “Or they need to make sure their general liability policy has certain endorsements that are in place and that there’s adequate insurance for negligence.”

Ducks in a Row?

Additionally, insurers write railroad protective liability coverage based on the term of the project, not on an annual basis—which means it’s easy to get caught off-guard.

“As early as possible, determine if you need a railroad protective policy and then gather the information and get that to an insurer,” advises Sarah Rosenholtz, managing account executive for the Travelers Construction Railroad Protective Unit. “No one ever forgets to renew their GL policy, but often the contractor or agent doesn’t realize they need a railroad protective policy until the last minute.”

That can be a big problem if the policy is late and a contractor can’t start his or her work. “Years ago, you had your quotes bound, got your policy number and your certificate of insurance, and you were good to go—eventually the policy would get to you,” Rosenholtz explains. But that’s changed in the last two to four years. “We’re seeing more and more that the contractor can’t even get onto the job site unless they have the actual policy in hand—a certificate of insurance is not good enough,” Rosenholtz says.

And as with any niche, partnering with companies that can offer industry expertise is never a bad idea. “The agent may have a lot of experience with contractors, but this is a line of coverage that many agents don’t handle on a regular basis,” Rosenholtz says.

“You might have construction clients that maybe have never done construction near a railroad track, so then it’s a new exposure to them,” Whiddon adds. “They may be construction experts, but maybe their construction expertise has been in commercial-grade buildings or in residential construction. If they then now come into the railroad space, that requires a different skill set in terms of expertise.”

Jacquelyn Connelly is IA senior editor.