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An Owner Controlled Insurance Program, (OCIP), is provided by an Owner/Developer, and partners the Developer, General Contractor, Sub-contractors, and Independent Contractors for a specific construction project under one insurance policy. Commercial Liability coverage is provided for all parties under this policy. In some cases, Builders Risk coverage can also be provided. All contractors provide their bids excluding insurance and are covered under the one policy for the term of their operations on the project.

Benefits of a Wrap Up Program
Most Wrap UP programs are undertaken with the goal of achieving cost savings based on economy of scale. In today's insurance marketplace, the unavailability of insurance for many contractors working on condos, townhouses, multi-family residences, and tract homes or subdivisions is a major reason for the program. Other incentives include reducing litigation in the event of a claim, facilitating compliance with safety or health regulations, maintaining control of the insurance coverage and claims handling and promoting a uniform safety program.

Reduced Litigation and Cross Resolution
In addition to third party claims from outside interests, litigation on a work site often is a result of claims brought by injured workers and independent contractors who seek redress through allegations of an unsafe worksite. These, combined with the possibility of a number of large class actions suits for workmanship and defect, often cause litigation to become a finger pointing game. A Wrap Up mitigates the likelihood of disputes over on-site work, multiple insurers or cross liability suits. The common insurer for all parties represents a unified defense in the event of a claim. Contract indemnifiction provisions between the parties are easier to negotiate with adequate limits in place and all parties represented in common. The Wrap Up Contract provides a number of ways to resolve disputes prior to litigation.

Control of Insurance Coverage
Insolvent insurance companies, policy exclusions, inadequate or canceled coverage, denials of coverage by claims adjusters, these are all possibilities when insurance is purchased by each contrator on the job site. Under the OCIP, the developer and general contractor can achieve a level of comfort that the coverage terms, limits and defense of any claim are controlled and often broadened. Higher limits of coverage are often available to the Wrap Up and simplification of the insurance and administration through one policy and program can save time and money. Having one policy and one insurer involved should mean fewer coverage disputes, and faster, cleaner claims handling.

Loss Control and Safety Programs
One of the primary cost saving features of a Wrap Up Program is a unified and enforcable safety program. A great opportunity for prevention and mitigation of any accidents or damages is a direct result. All contractors on site, including many smaller contractors without their own safety programs, become aware and follow a specifically designed loss control program. A safe and secure work place will reinforce an on time and profitable finished product.

All Contractors are Eligible
The inclusion in a Wrap Up Program of any contractor on site is determined by the Owner or General Contractor. Most trade contractors will be included in the policy. As such, they will bid their contracts without insurance costs. In joining the Wrap Up Program, they will be charged an insurance premium equal to their current cost of insurance based on their current rates. If they have operations outside the Wrap Up, their own insurance policies are endorsed to exclude all work on the Wrap Up Project, eliminating duplicate coverage and charges. For many smaller contractors, the Wrap Up policy may be the only coverage available for their work on this type of project as their own policy may exclude work for condos/multi-residence and tract homes. Contractors who have operations outside of the project must continue to insure those operations seperately since the Wrap Up policy will not insure outside the work site.

Policy Length and Coverage
The policies written for a Construction Wrap Up are for the term of the construction. In addition, they often will provide extended completed operations coverage. Coverage limits are written for the construction project and there is one set of limits for the project. In the event Workers Compensation is included in the Wrap Up, seperate policies are written for each contractor. A large deductible is placed on all claims. In many cases, the owner or general contractor has an in house arrangement with all sub-contractors and independant contractors to fund this deductible in the event they are responsible for the loss.

Who Administers the Program?
A third party administer, along with Aloha Insurance Services, will assist in the set up and administration of the program. This includes contract wording, contractor sign up, loss control, safety program set up and general assistance in day to day administration. Once the program is established, the owner or general contractor will monitor and control the loss control, safety program and sign up new contractors. Aloha Insurance Services is always available for assistance.

Portions courtesy of and © Insurance Information Institute ( Copyright © 2001-2020 Aloha Insurance Services, Inc. Kona HI All rights reserved.
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