Considering an OCIP? Read on for the top benefits.
Most contractors operating in the United States have participated in an OCIP. It protects the project owner and is designed to coordinate general liability coverage for all eligible parties working on a specific construction project.
As you may well know, construction jobs come with a number of liability risks. Previously, OCIP (or ‘wrap insurance’) was used only on large construction projects that exceeded $50 million in costs. Today, however, they are frequently used by project owners on smaller residential construction and renovation jobs. From the physical building to the contractors to the liability risks, it pays to have protection (and peace of mind!) under one policy.
How does OCIP work?
Under an OCIP, the property owner and the general contractor will work out the terms of coverage together. The general contractor will then purchase and pay for the OCIP policy. In return for not having to provide their own liability insurance coverage, contractors and subcontractors may be offered lower rates for their work. Should a claim need to be filed, the project manager will be responsible for contacting the insurance company and paying any deductibles.
OCIP Benefits:
A well-constructed OCIP provides many benefits, including:
- Broad coverage and uniform limits for contractors of every tier
- Claim adjustments by one insurer
- Lowers insurance costs by lumping coverage into one policy
- Coverage stability for completed operations through the applicable statute of repose
- Immediate policy response to a covered general liability claim without the need to first assign fault among covered contractors if the cause is not immediately clear
- The support of rigorous loss control programs, which often include safety incentive programs to provide recognition and sometimes monetary rewards to contractors and their employees for a strong safety performance
OCIP Challenges
An OCIP Insurance has collateral requirements, which can include 100% pre-payment for any premiums and expected losses, letter of credit, or cash collateral. The Owner should consider each, concerning overall cash flow.
Securing the best construction insurance for your projects can be complicated, yet critical. Contact a team representative at Nahai Insurance Services to discuss the most reliable insurance solutions for you and your project.
