By: Darren O'Connell - Contractor/Construction Insurance Broker
Specialist
Rhodes & Williams Insurance Brokers
Large construction projects present many difficulties because of
increasing costs, lack of control, and rising litigation. Ensuring
all of these issues are addressed while obtaining proper insurance
coverage can be intimidating at best. In addition to all of the
exposures you personally face as an owner or general contractor,
you also have to deal with potentially different forms of insurance
coverage for all of your subcontractors. That means having to
review their insurance for terms, conditions and exclusions to
ensure they are providing adequate limits and coverage or face a
potential uninsured loss.
Given this overwhelming scenario, it's no wonder that wrap-up
insurance programs have steadily increased in popularity. With a
wrap-up program, the owner or general contractor supplies a single
insurance program for all parties involved in the project for
duration of the project term. When the owner purchases the wrap-up
protection, the program is often referred to as an Owner-Controlled
Insurance Program (OCIP). If the general contractor purchases the
wrap-up insurance, it is known as a Contractor-Controlled Insurance
Program (CCIP). However, keep in mind that regardless of what name
it is referred to, the coverage is still underwritten by an
insurance carrier.
There are some significant benefits to using this type of
insurance.
- The assurance that all parties to the project have adequate
insurance, instead of reliance on a multitude of certificates of
insurance that do not guarantee proper insurance coverage (and not
having to review every contractors policy to ensure they have
adequate coverage);
- Avoids coverage gaps in insurance policies. Gaps in coverage
between policies are hard if not impossible to bridge;
- Avoids paying the contingency and profit loading applied by
subcontractors to their actual insurance costs;
- Eliminates or substantially reduces duplication of insurance
premium costs with contractors and each of their
subcontractors;
- A single, coordinated loss control and insurance claims
handling program makes for a safer job site, which also results in
a project completed on time and under budget;
- Broader insurance coverage that meets prescribed standards and
provides uniform insurance protection; higher limits can be
purchased due to a larger volume of insurance;
- Extended completed operations coverage on the entire
project;
- As the purchaser you are the "named insured and have the
authority to select your insurer, the types and limits of
coverage";
- Assists smaller contractors that do not have to factor
insurance costs into their bid.
Wrap-up insurance programs can be a cost-effective way to get
the proper insurance against the risks and exposures that are
inherent to your particular project. It also provides a tool for
quality control by giving you the ability to coordinate the
performance standards for all the subcontractors who will work for
you.
Contact a Rhodes & Williams insurance broker now for more
information about wrap-up insurance programs.