An owner-controlled insurance program is a combination of coverages that protects multiple contractors involved in a single construction project. Some people refer to OCIP as wrap-up insurance, because it is like a big blanket that covers many parties. Here is an explanation of what OCIP covers and who pays for it.
An OCIP is not a single policy but is rather a portfolio of various coverage types. The insurance policies included in an OCIP usually include the following:
- Errors and omissions
- Builders risk
- Pollution liability
While an OCIP provides a broad range of coverages to a variety of people involved in a construction project, certain specialty insurances are excluded. Here are some types that are not usually included in the portfolio:
- Vehicle insurance
- Commercial property
- Inland marine
The general contractor is the one who pays the OCIP premium and is responsible for any deductibles. The contractor then offers coverage to subcontractors, who count the liability insurance as part of their pay. However, the contractor may require payment from parties who cause damage resulting in a claim.
Having a blanket insurance policy is a much simpler strategy than requiring everyone involved in a construction project to have individual coverages. OCIP speeds up claim processing times and also lowers everyone’s costs.