Wrap-Up Insurance on Large Construction Projects
When you are about to ensure a sizeable construction project, you want to make sure that it is going to be well protected, first. On construction sites, accidents, injury, and damage can occur, which is why it is so important to get your insurance ducks in a row before making any moves. For construction sites, there are generally two types of wrap-up insurance programs utilized: Owners-Controlled Insurance Program (OCIP) and Contractors-Controlled Insurance Program (CCIP). Both wrap-up programs aim to “wrap up” all construction participants with suitable and reliable coverage.
When a construction project has wrap-up insurance, regardless of whether it is OCIP or CCIP, there will be an insurance manual that will explain certain aspects to the construction participants such as:
- What type of insurance is included in the wrap-up program
- How premiums are to be determined for the wrap-up program
- Who is responsible for any deductibles for claims
- The type of insurance the participant still needs to obtain
- Insurance policy exclusions
In addition, the manual will also identify the administrator of the wrap-up program. Understanding this manual can help you to ensure that your project is well protected, as well as everyone working on it.
When determining whether an OCIP or CCIP is right for your project, be sure to do your research. There are plenty of benefits to both policies, but each has unique challenges. For example, an OCIP has collateral requirements, which can include 100 percent pre-payment for any premiums and expected losses. For this reason, the owner should consider the overall cash flow and be able to plan accordingly.
A unique challenge for CCIP is that because it is managed by the contractor, there is a significant amount of pressure placed on that single contractor. Not only are they responsible for administration but they retain the financial risk for the project, which means the success of the program is in their hands.
Which type of wrap-up insurance is right for your project? It depends! To have an expert assess your unique situation and help you decide whether it would be best served by OCIP Insurance or CCIP Insurance coverage, contact Nahai Insurance Services. Our staff of experienced wrap policy professionals can help you best protect your upcoming project.