How to Know Which Wrap-Up Insurance Policy to Get
Wrap-up insurance is commonplace on large, complex construction projects. On these sites, there are generally two types of wrap-up insurance programs routinely utilized: Owners Controlled Insurance Program (OCIP) or Contractors Controlled Insurance Program (CCIP). Under both wrap-up programs, the objective is that most (if not all) of the construction participants, such as the contractor and subcontractors, are wrapped up or covered under one insurance program.
The type of controlled insurance program is determined by the party that sponsors the wrap-up. The owner of a construction project sponsors an Owner Controlled Insurance Program (OCIP), while a general contractor sponsors a Contractor Controlled Insurance Program (CCIP). The sponsor is in charge of securing insurance coverage, paying for and administering the insurance program.
When determining which program is best for your project, here are some factors you should be aware of for OCIPs and CCIPs.
- Cost control
- Claim control
- Improved safety
- Reduced litigation
- Enhanced and uniform coverage
- Coverage availability
An OCIP 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.
- Consistent risk transfer in all documents
- No deductibles
- Premiums include all of the costs
- Consistent return-to-work programs
- Established crisis management protocols
Since this is managed by the contractor, there is a significant amount of pressure placed on the contractor. They hold full responsibility for administration and control who enrolls in the program. The contractor also retains 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.