The challenge of making sure all contractors on the job are adequately insured is an important challenge! Any lack or crack in coverage, could leave you, the construction project owner vulnerable and at risk. Specifically inspecting each contractor’s coverage and checking for limitations, exclusions or other hap-hazards that may be hidden, can be daunting and costly for sure. As more project owners elect to use owner controlled insurance programs (better known in the industry as an OCIP) to replace the traditional methods of insurance for their construction projects, time-consuming scrutiny may not be necessary.
OCIP and CCIP policies are designed to reduce costs on construction projects and provide owners and contractors more control over risk management. By using an OCIP, the potential cost savings on large construction projects can be of significant value depending on several variables.
These policies are designed to include owners, general contractors, and subcontractors under one insurance program, but there can be coverage gaps and other coverage pitfalls with wrap policies.
So let’s examine the scenario. If loosely written, the insurance manual may leave an opening for the OCIP carrier to argue, for example, that the owner’s umbrella coverage is excess to everything that the contractor has also put into place. This could cause lengthy disputes and unnecessary grief! Make sense?
The contractor should discuss the relationship between the OCIP and the contractor’s regular insurance program with the contractor’s broker or insurance carrier. Among other things, the contractor should ask the latter for an endorsement expressly declaring that the OCIP will provide primary coverage.
So is an OCIP the most viable risk management approach to use for your construction project?
An OCIP feasibility study is undertaken to evaluate the risk factors for deciding on the reasonableness of whether an OCIP is a viable option. The study serves as a decision tool to evaluate risk factors for deciding on using or not using an OCIP for a program or project under consideration. It basically evaluates if an OCIP approach makes sense for a project owner to utilize on one construction project, or a group of projects and provides an educated assessment of the pros and cons of the insurance & risk management approach for a specific project or program under consideration.
The study should address all the phases of an OCIP, including a project’s risks & exposures, critical mass, type of construction, and insurance program structure. It should cover formation, implementation, and administration, as well as management during the course of construction, project close-out, and final audit.
Controlling our partners’ cost of risk is the primary goal of MRG’s risk management services teams. Our team delivers solutions that allow us to control and eliminate exposures. From project safety plans to OSHA 30-hour training, MRG’s risk management team can execute. MRG serves as an outsourced risk management firm for our partner clients.
Our team will seamlessly work with yours. From reviewing and providing recommendations on insurance requirements to advising clients’ estimating and bid process, a MRG team of two claims professionals, a loss control consultant, a client services executive and a risk management brokerage specialist will be there every step of the way.