{"id":902377,"date":"2024-03-07T15:08:52","date_gmt":"2024-03-07T22:08:52","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=902377"},"modified":"2024-03-07T15:09:03","modified_gmt":"2024-03-07T22:09:03","slug":"wrap-up-construction-insurance-pros-cons","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/wrap-up-construction-insurance-pros-cons\/","title":{"rendered":"To OCIP or Not to OCIP, That Is the Question \u2013 Pros and Cons of Wrap-Up Construction Insurance"},"content":{"rendered":"\n<p>Michael Jefferson | <a href=\"https:\/\/www.dwt.com\/blogs\/government-contracts-insider\/2024\/02\/pros-and-cons-of-ocip-project-insurance-coverage\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Davis Wright Tremaine<\/a><\/p>\n\n\n\n<p>Developers and owners often find that obtaining insurance coverage for their construction projects can be confusing and unnecessarily complicated. When dealing with construction projects in excess of $50 million, an Owner Controlled Insurance Program (&#8220;OCIP&#8221;) (also known as <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/wrap-up-insurance-policies-streamline-construction-defect-litigation\/\">Wrap-Up<\/a> or consolidated insurance) may be an option for owners to consider when deciding on the optimal insurance coverage.<\/p>\n\n\n\n<p>Under an OCIP, a construction project owner purchases on-site insurance coverages to be bundled (or wrapped up) into one consolidated program that covers (almost) all construction participants for a given project.&nbsp;<em>Typically<\/em>&nbsp;an OCIP includes workers compensation, commercial general liability, contractor&#8217;s pollution liability, umbrella\/excess liability, and builder&#8217;s risk policies. On the other hand, an OCIP will&nbsp;<em>usually not<\/em>&nbsp;include professional liability or automobile liability policies. When considering whether an OCIP makes sense for a large construction project, here is a list of factors to consider.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Advantages<\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Better control over the purchase of insurance, which should lead to cost savings.<\/li>\n\n\n\n<li>Less coordination is required to ensure that all construction participants have sufficient insurance coverage.<\/li>\n\n\n\n<li>Larger coverage limits for subcontractors (e.g., coverage limits of $25 million under the OCIP, in lieu of $1 million or $2 million under their own policies).<\/li>\n\n\n\n<li>Ease of ensuring that all additional insureds are covered by construction participants&#8217; insurance policies.<\/li>\n\n\n\n<li>Reduction of possible coverage gaps among the various construction participants.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Disadvantages<\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Generally higher deductibles, which a) subcontractors may find unpalatable or b) may require an owner and\/or contractor to cover some portion of a deductible in the event of an insurable event, regardless of fault.<\/li>\n\n\n\n<li>Greater administrative responsibilities for owners in setting up the OCIP and ensuring that all construction participants are enrolled.<\/li>\n\n\n\n<li>May not cover architects, engineers, or construction participants who perform most of their work &#8220;off-site,&#8221; such as material suppliers and fabricators (e.g., structural steel or cross-laminated timber).<\/li>\n\n\n\n<li>Still requires that contractors and subcontractors maintain &#8220;off-site&#8221; insurance coverage (e.g., automobile liability and off-site commercial general liability).<\/li>\n<\/ul>\n\n\n\n<p>Most importantly, OCIPs can affect indemnification and defense of claims. Most construction contracts require contractors and subcontractors to broadly indemnify an owner. When an OCIP is in place, a contractor may be more hesitant to accept an uncapped indemnification and defense obligation above what is covered by the OCIP (especially if the contractor&#8217;s own insurance has a higher coverage limit than does the OCIP).<\/p>\n\n\n\n<p>Developers and owner should consult with their insurance broker regarding the best coverage options for their construction project.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Michael Jefferson | Davis Wright Tremaine Developers and owners often find that obtaining insurance coverage for their construction projects can be confusing and unnecessarily complicated. When dealing with construction projects in excess of $50 million, an Owner Controlled Insurance Program (&#8220;OCIP&#8221;) (also known as Wrap-Up or consolidated insurance) may be an option for owners to&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/wrap-up-construction-insurance-pros-cons\/\">Continue reading <span class=\"screen-reader-text\">To OCIP or Not to OCIP, That Is the Question \u2013 Pros and Cons of Wrap-Up Construction Insurance<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9914],"tags":[9895,23,11985,10887],"class_list":["post-902377","post","type-post","status-publish","format-standard","hentry","category-insurance-coverage","tag-advise-consult","tag-insurance-coverage","tag-owner-controlled-insurance-programs","tag-wrap-up-insurance","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>To OCIP or Not to OCIP, That Is the Question \u2013 Pros and Cons of Wrap-Up Construction Insurance - Advise &amp; 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