If you are an Asset Owner, General Contractor or Construction Manager, then you are no stranger to the world of insurance. However, when procuring an insurance policy or planning a project, do you know what program is best for you? Do you know whether a wrap-up model or traditional model is more favorable? If choosing a wrap-up policy, is an owner-controlled insurance program (OCIP) preferable to a contractor-controlled insurance program (CCIP)?
All project stakeholders need to be well educated in the world of insurance if they want to protect both themselves and those around them.
This article provides an in-depth exploration of OCIP insurance, the advantages/disadvantages for various stakeholders, a comparison to CCIP insurance, and more.
Table of Contents
Key Takeaways
What is OCIP?
Advantages and Disadvantages of OCIP Insurance
Advantages of OCIP Insurance
Disadvantages of OCIP Insurance
Coverage Under OCIP Construction Insurance
1. General Liability
2. Workers’ Compensation
3. Excess Liability
4. Builders’ Risk
5. Professional Liability
6. Subcontractor Default Insurance
7. Completed Operations Coverage
CCIP vs. OCIP Insurance
Conclusion
Key Takeaways
- An owner-controlled insurance program (OCIP) is a type of wrap-up insurance policy that is managed and held by an Asset Owner as opposed to any of the acting contractors.
- OCIP policies offer Owners the benefits of reduced costs, higher dedicated limits, quicker enrolment, precise coverage, simplified claims handling, and broader contractor access.
- However, OCIP insurance is not perfect. There is an increased administrative burden for Owners and some contractors may aim to take advantage of the no-fault coverage they are receiving.
- OCIP policies offer coverage that spans a variety of otherwise independent insurance coverages, such as: general liability, workers’ compensation, excess liability, employers’ liability, professional liability, subcontractor default insurance, completed operations coverage, and more.
- Owner-controlled insurance programs are more work for Asset Owners when compared to contractor-controlled insurance programs. However, Asset Owners unlock greater project control and may be eligible for greater coverage than what is available through a CCIP.
- myComply is the leading solution for Asset Owners and General Contractors that are looking to secure substantial insurance reductions by implementing proactive and preventative safety measures on their construction sites. Book a demo with a product expert today to find out more!
What is OCIP?
An owner-controlled insurance program (OCIP) is a type of wrap-up insurance program that is held by the project or asset owner. OCIP insurance is designed to offer Asset Owners the ability to insure an entire project through one insurance provider, as opposed to depending on General Contractors and Subcontractors to secure their own insurance.
Learn More: Traditional vs. Wrap-Up Insurance: What You Need to Know
OCIP insurance programs also combine various types of insurance coverages into one package policy, such as:
- General liability
- Workers’ compensation
- Excess liability
- Builder’s risk
- Professional liability
- Subcontractor default insurance
- Completed operations coverage
- And more
We will explore each of these coverages in further detail below.
Advantages and Disadvantages of OCIP Insurance
When considering whether an OCIP is right for you, it is important to weigh both the benefits to you (the Owner) as well as the benefits for the General Contractors and Subcontractors that will be conducting work on the project.
Advantages of OCIP Insurance
| For the Owner | For Contractors |
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Disadvantages of OCIP Insurance
| For the Owner | For Contractors |
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Coverage Under OCIP Construction Insurance
As mentioned above, OCIP insurance generally covers four primary insurance buckets, those being: commercial general liability, workers’ compensation, excess liability, builders’ risk, professional liability, subcontractor default insurance, and completed operations coverage. Let’s explore each of these coverages in more detail.
1. General Liability
General liability insurance or commercial general liability (CGL) is the insurance that protects the Owner’s interests under an OCIP policy. The primary provisions outlined under most general liability insurances through an OCIP program are contractual liability, personal injury liability, and property damage. Additional risk-limiting provisions may be included, but these are the primary benefits under standard general liability.
Contractors who enroll for coverage under OCIP insurance will likely have some form of general liability insurance with their existing provider. Depending on the nature of the OCIP insurance procured by the Asset Owner, the contractor might be able to reduce their existing coverage and still be fully covered for the duration of the project. However, some overlap in coverage is not necessarily a bad thing either.
2. Workers’ Compensation
Workers’ compensation insurance provides compensation to any worker that is injured while working on a construction project. Workers’ compensation covers any resulting medical bills and compensates workers for any required time away from work. Workers’ compensation is also required in most states.
Workers’ compensation is included in every OCIP insurance policy. When it is added, insurers tend to get involved in the project sponsors vetting process for contractors while also mandating certain loss prevention measures for the duration of the project. Workers’ compensation can be a source of insurance reductions for many OCIP policies if the Asset Owner can demonstrate a safety focus and a thorough contractor vetting process, resulting in lower risk scores and lower premiums.
3. Excess Liability
Excess liability is exactly as it sounds, an extension on coverage provided through general liability insurance. Having a little extra liability coverage is never a bad idea in construction, so consider excess liability necessary when crafting your OCIP policy.
4. Builders’ Risk
Builders risk insurance protects construction projects from any damages resulting from weather, vandalism, and theft. Securing builders risk coverage under the umbrella of your OCIP is necessary for all major construction projects.
5. Professional Liability
Professional liability insurance is an optional coverage that protects Asset Owners from any losses that result from the work of engineers, architects, and other design professionals. If your project is large and complex, then you may want to evaluate this coverage. That being said, most licensed design professionals will be secured under their own coverage and may not want (or need) coverage under your owner-controlled insurance program.
6. Subcontractor Default Insurance
Subcontractor default insurance provides Asset Owners with coverage in the event of a contractor that fails to complete their work on the project. This insurance covers all unforeseen expenses related to the unfulfilled work.
7. Completed Operations Coverage
Completed operations coverage is a simple add-on that extends the coverage of the owner-controlled insurance policy beyond the completion date and ideally through the statute of limitations.
CCIP vs. OCIP Insurance
An insurance type that is often confused with OCIP insurance is a contractor-controlled insurance program (CCIP). The primary difference between CCIP and OCIP insurance is the policy holder. Under a CCIP policy, the General Contractor typically holds the policy and insures all their Subcontractors under their wrap-up program, whereas the Asset Owner will hold the policy under an OCIP policy.
Here is a short video exploring some of the key differences between CCIP and OCIP insurance:
A full breakdown of CCIP vs OCIP insurance:
| OCIP | CCIP | |
| Cost | Owner controlled insurance programs can result in greater insurance expenditure as top contractors can often secure discounts based on past performance. | CCIPs are a more cost-effective approach when the General Contractor has a proven record of safe site operations and limited record of loss or damages. However, the opposite can also be true. |
| Speed-to-Policy | OCIP policies can often be a little slower to production as most Asset Owners don’t have rolling policies established with their insurance providers. This means that a new OCIP needs to be negotiated for each project. | General Contractors that specialize in certain project types might be able set up a rolling CCIP with their insurance provider, where minimal administrative work is required to start a new policy. |
| Policy Management | Under an OCIP, the policy is managed by assigned program administrators that work for the Asset Owner. | Under a CCIP, the policy is managed by administrators that work for the General Contractor. |
| Insureds | Under an OCIP, the Asset Owner is the first named insured and the General Contractor, Subcontractors, and any other parties on the project are named insureds. | Under a CCIP, The General Contractor is the first name insured, and the Subcontractors, plus any other parties are named insureds. Sometimes, the project owner is an additional insured, or they share named insured responsibilities with the General Contractor. |
| Coverage Limits | OCIP policies are typically project-specific, meaning that all coverages are exclusive to that project, unlike CCIPs which are sometimes shared across multiple projects. | Sometimes, CCIP coverage extends across multiple projects being worked by the contractor. This can result in lower limits for project stakeholders if there are numerous incidents on another project. |
| Oversight | An OCIP allows the owner to take an active role in negotiating policy limits, understanding policy details, claims negotiation procedures, safety/loss prevention programs, and more. | The contractor negotiates their CCIP, and the Asset Owner may not be entirely aware of the nuances of the insurance policy. Contractors should always provide detailed insurance documents to the Asset Owner and consider bringing them on as a named insured. |
Interested in finding out more about CCIP insurance? Read our full article here: Benefits of a Contractor-Controlled Insurance Program (CCIP).
Conclusion
If you are an Asset Owner, an OCIP insurance policy can be a great way to reduce your risk exposure and simplify production on your projects. That being said, it’s not always easy to secure OCIP coverage from and insurance provider. Insurance providers take various factors into account when assessing your policy eligibility and determining rates for each coverage within your OCIP.
One of the best ways to improve your eligibility for OCIP insurance coverage while also reducing your perceived insurance risk is by leveraging construction technologies as component of your loss prevention program.
myComply is the leading access control solution for Asset Owners. By leveraging on-site hardware, such as smart readers and turnstiles, myComply can improve site security by tracking every worker that enters/exits a project site, while also denying access to anyone that is not certified or permitted to be on-site. This prevents loss from vandalism/theft and ensures that every worker has the necessary qualifications to be conducting safe work on the project.
If you are interested in finding out more, then book a demo with a product expert today!
