OCIP and CCIP
On nearly every construction project, the parties involved are required to procure various types of insurance coverage, most notably worker's compensation coverage and commercial general liability ("CGL") coverage. Generally each party involved (i.e. the owner, contractor, design professionals, and the subcontractors) are each responsible for obtaining their own insurance. However, Owner Controlled Insurance Program ("OCIPs") and Contractor Controlled Insurance Program ("CCIPs"), collectively referred to herein as "CIPs" and commonly known as "wrap-up" policies, provide a way for one project party to purchase one policy covering everyone working on the job. CIPs are commonly referred to as "wrap-ups" because they "wrapup" the following four critical project components:
(1) insurance;
(2) claims management;
(3) safety; and
(4) risk control.
CIPs can be designed to either insure all of the project parties against loss exposure on a single project or across multiple sites on multiple projects. Under the latter scenario, the CIP is referred to as a "rolling" CIP.
The party in charge of procuring, paying for, and administering the insurance is referred to as the "Sponsor." The Sponsor is authorized both to select the insurance carriers who will provide coverage and to also negotiate the policy terms, conditions, and limits. CIPs are frequently touted for the potential for cost-savings because the pricing for global coverage from one carrier can in all likelihood be obtained at a substantial discount. Furthermore, claims handling and defense litigation costs may be reduced or more easily controlled with one carrier providing coverage and the defense.
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