As the owner of a large construction project, there are several insurance and risk benefits to consider when deciding between an Owner Controlled Insurance Program (OCIP) and a Contractor Controlled Insurance Program (CCIP). Here are some key points to consider:
Key Considerations
1. Cost Control: With an OCIP, the owner takes control of the insurance program, allowing for better cost control and potentially reducing insurance costs. The owner and their wrap administration team can negotiate insurance rates directly with insurers and eliminate markups by contractors. In a CCIP, the contractor manages the insurance program, which may result in less control over costs.
2. Coverage Consistency: An OCIP provides consistent insurance coverage across all contractors and subcontractors involved in the project. The owner controls the coverage forms in order to benefit everyone. This ensures that all parties have the same level of coverage, reducing potential gaps or overlaps in insurance policies. In a CCIP, the owner gives up control and relies on the contractor, who may not control the process, leading to potential coverage inconsistencies.
3. Claims Management: With an OCIP, the owner has direct control over the claims management process. As the first named insured on the policies, this allows for better coordination and faster resolution of claims, reducing delays and potential disputes. In a CCIP, claims management may be handled by individuals who the owner has very little control over, which can lead to coordination challenges and delays in resolving claims.
4. Risk Transfer: An OCIP allows the owner to transfer the risk of construction-related losses to the insurance program and transfer off-site claims issues to the various contractors and their off-site insurance carriers. This can provide better protection for the owner against potential liabilities. In a CCIP, the risk may be partially transferred to the contractor, potentially exposing the owner to additional liabilities.
5. Safety and Risk Mitigation: An OCIP provides the owner with greater control over safety and risk mitigation measures. The owner can set specific safety standards and requirements for all contractors, ensuring a consistent approach to risk management. In a CCIP, the contractor may have more control over safety measures, which can lead to variations in risk management practices.
6. Change in General Contractor: An OCIP allows the owner to replace the project general contractor with a comparable general contractor if their current GC is having financial problem or goes out of business. If an owner relies on the GC to provide a CCIP, and the GC goes out of business, the owner will struggle to find a new insurance carrier to get involved and replace the CCIP mid-term. The owner will pay a huge premium on that premium, if they were to get in this situation.
Conclusion
Ultimately, it’s about two things; “Cost” and “Control”. The decision between an OCIP and a CCIP depends on various factors such as project size, complexity, and the level of control the owner wants to maintain over insurance and risk management. It is advisable to consult with the insurance professionals at Swarts, Manning & Associates and legal experts to determine the most suitable insurance program for your specific construction project.
Each month, Swarts, Manning & Associates covers relevant topics for your business. Stay tuned to hear more discussions about managing your insurance and industry-specific tips.
Click here to submit a Quote Request
If we have had the pleasure of working with you, we would love for you to leave a review on Google. Your honest thoughts help us improve and grow, and allow potential customers to get a better understanding of what we have to offer. Thank you in advance for your time and support!
