What Is An OCIP?
An Owner Controlled Insurance Program (OCIP) or “wrap-up program” is a coordinated insurance program for construction projects. An OCIP, unlike traditional construction insurance coverage, provides eligible participants of a construction project with general liability coverage under one policy.
OCIP Key Features
- Under one master policy, an OCIP covers commercial general liability and/or workers’ compensation insurance for all enrolled participants associated with a specified project.
- Participants generally include all enrolled contractors and subcontractors of every tier involved with on-site project construction.
- An OCIP does not cover vendors, suppliers or material dealers and may also exclude contractors who handle hazardous materials such as asbestos and hazardous waste.
- Decision making control rests with the purchaser (who is often the project owner but can also be the general contractor).
- Architects and engineers are often included as participants, but not for professional liability.
- An OCIP covers the life of the project, plus an extended completed operations' period.
- Provides uniform coverage and limits of liability for all participants.
- Eliminates owner concern that individual contractors or subcontractors may not be adequately covered.
- Enables the owner to consolidate the insurance policies they will rely on in the future into one uniform, broad program.
- Enables owners and contractors to mount a stronger, single-entity defense in construction defect lawsuits. Rather than many lawyers and many insurance carriers who may be manipulated into settling a lawsuit at inflated costs, an OCIP uses one insurance company and one legal firm to handle the claim.
- Since there is no coverage for cross claims, there is less incentive for plaintiffs’ attorneys to create infighting amongst the participants.
Disadvantages of Traditional, Individual Coverage
- The majority of subcontractor insurance policies exclude coverage for multi-family unit construction.
- The owner does not have control over the coverage purchased by the general contractor and the potential impairment of insurance coverage limits on the general contractor’s insurance.
- The owner has significant exposure to losses not covered under the general contractor’s insurance.
- The owner could be subjected to complicated and expensive claims handling procedures.
- Individual participant insurance policies covering the same risk become targeted in order to allocate blame and remedy a claim. Plaintiff attorneys often times exploit the weakness of multiple defendants “general and each sub, regardless of their involvement”.
Possible Disadvantages of an OCIP Program for Contractors and Subcontractors
- Uncompensated administrative costs.
- Inadequate limits of insurance.
Dean...This is the most efficient third party OCIP administrator I have ever worked with... they also have services available out your way... so check 'em out... Insurance Agent