How OCIPs Are Used for Condominium Projects
Owner-controlled insurance programs (OCIPs), or “wrap-ups”, are project-specific insurance policies designed to cover the job site risks and completed operations exposures of the owner and contractors on a construction project. Generally, wrap-ups include general liability, workers’ compensation, builder’s risk, and pollution liability. Some insurance agencies can add professional liability, too.
Historically, wrap-ups were designed for projects with construction values exceeding $100 million. The main reason to implement an OCIP on larger projects is to create a profit center for the program sponsor and to allow for better coordination of loss prevention and safety. Wrap-ups also are used nearly exclusively on condominium projects of any size and are commonly used on other types of residential projects (e.g., tract homes, apartments). This is due to the fact that these types of projects have been fraught with litigation.
An OCIP provides a centralized, controlled defense for the insured parties, and covers the owner and subcontractors working on the project. This allows the developer or owner to attract subcontractors that otherwise would not bid these projects.
While wrap-up policies open up more doors for subcontractors, they need to understand the coverage being provided, the insurance credit they will be asked to provide, and their deductible obligation. Similarly, they should know the coverage in their own general liability policy. Note that most general liability policies available to subcontractors will exclude condominium work and any work done on a project covered by a wrap-up policy.
Almost all new condos built today will be insured by a wrap-up insurance policy. Contractors that develop, design or build this type of project must understand their coverage and obligations under the contract before beginning.
To have an expert assess your unique situation and help you decide on OCIP Insurance coverage, contact Nahai Insurance Services. Our staff of experienced wrap policy professionals can help you best protect your upcoming project.
