In the construction industry, owner-controlled insurance programs (OCIPs) and contractor-controlled insurance programs (CCIP), also referred to as “wrap-ups,” commonly are used to provide insurance coverage for the owner, general contractor and subcontractors on a project.
Under these programs, one set of insurance policies is “wrapped” around a specific project to provide coverage for the enrolled parties. A wrap-up thus provides one set of policy limits that is shared by all enrolled parties. This differs from the “traditional” approach to construction insurance coverage, where each project participant is required to obtain its own insurance coverage for the project through its individual corporate insurance policies.
Because of the benefits provided by wrap-up insurance programs, the utilization of wrap-ups has increased recently and these programs are no longer limited to large-scale construction projects. Whether an owner or general contractor considering the implementation of a wrap-up, or a subcontractor likely to be involved in a project involving an OCIP/CCIP, it is important to understand how these programs work and the typical coverages that they afford so as to adequately protect their interests.
Each wrap-up program will contain differences in the scope and conditions of coverage. It is necessary, therefore, for contractors to read the governing documents pertaining to both the project and the wrap-up in which they are involved to understand the project’s insurance requirements and the scope, conditions and limits of coverage afforded by the wrap-up program.
Following are some of the common provisions usually found in OCIPs/CCIPs and typical issues of which wrap-up participants should be aware. Contact Debbie Klisch at debbie [at] scicteam [dot] com YOUR CONSTRUCTION RISK MANAGER