Under an Owner-Controlled Insurance Program (OCIP), the project owner sponsors, purchases, and manages the insurance coverage. This could be a private developer, government entity, or large institution.
When OCIPs Are Used
OCIPs are typically implemented on large, single-site projects—often with substantial construction values—where the administrative effort and cost can be justified.
How OCIPs Work
- The owner negotiates coverage terms and sets policy limits
- Subcontractors enroll in the program and receive coverage
- Claims are managed by the owner
- A detailed insurance manual outlines program requirements and procedures
Owners often choose OCIPs to gain greater control over coverage quality, consistency, and claims data. Another advantage is cost efficiency—subcontractors are usually required to exclude insurance costs from their bids for coverages provided by the wrap-up.
Key Consideration: Completed Operations Coverage
One critical area for subcontractors is completed operations coverage, which applies after a project is finished. Depending on the program, this coverage may extend for several years—or may be limited.
Understanding how long this protection lasts is especially important for projects with long-term liability risks.
Contractor-Controlled Insurance Programs (CCIPs)
A Contractor-Controlled Insurance Program (CCIP) is sponsored and administered by the general contractor. The GC purchases coverage on behalf of itself and enrolled subcontractors.
When CCIPs Are a Good Fit
CCIPs are often used on mid-sized projects or when the owner prefers not to manage an insurance program. They’re also common when a general contractor is overseeing multiple projects at the same time.
How CCIPs Work
- The GC controls administration and claims management
- Subcontractors enroll and are covered under the program
- Coverage can extend across multiple projects
Rolling CCIPs
Many CCIPs are structured as rolling programs, allowing contractors to add new projects over time. This spreads costs across multiple jobs and makes wrap-up programs more cost-effective, even for smaller projects.
Important Consideration: Control and Coordination
Because the GC manages the program, subcontractors may have less influence over claims handling. In the event of a loss, differences in priorities can arise regarding responsibility, cost allocation, and claims resolution.
What Wrap-Up Programs Don’t Cover
While wrap-up programs provide broad coverage, they do have limitations. Common exclusions include:
- Auto liability
- Professional liability and design errors
- Off-site operations
- Materials in transit
- Work performed outside the designated project site
In some cases, these coverages can be added through endorsements or separate policies, but they are not typically included by default.
Additionally, not all subcontractors may qualify for enrollment. Minimum thresholds—such as payroll, labor hours, or contract value—often apply.
Even when enrolled, contractors should not assume the wrap-up replaces all their insurance needs. Coverage is limited to the specific project and location.
Key Considerations for All Parties
No matter your role—owner, contractor, or subcontractor—understanding the wrap-up program before work begins is essential.
Review the Insurance Manual
Each wrap-up program includes an insurance manual that outlines:
- Who is covered
- What operations are included
- Policy limits and exclusions
- Administrative requirements
This document should be carefully reviewed before signing any contracts.
Understand Coverage Responsibilities
Clearly identify:
- What is included in the wrap-up
- What must be covered separately
- How existing policies will be affected
Pay Attention to Completed Operations
Confirm how long coverage lasts after project completion and whether it aligns with your exposure.
Know How Bid Credits Work
When insurance costs are covered by the wrap-up, subcontractors are typically required to adjust their bids accordingly. Failing to account for this can create complications during audits.
Work with Experienced Advisors
Wrap-up programs are complex, and missing details can lead to costly gaps. Working with an experienced insurance broker can help ensure the program is structured correctly and that all participants are properly protected.
Final Thoughts
Wrap-up insurance programs can simplify coverage and improve coordination across construction projects. Both OCIPs and CCIPs offer distinct advantages depending on the size, structure, and leadership of the project.
Understanding how these programs work—and what they do and don’t cover—is essential for minimizing risk. With the right planning and guidance, wrap-up programs can provide a more efficient and consistent insurance solution for everyone involved.
For more information or guidance on wrap-up programs and construction insurance, reach out to the insurance professionals at Horst Insurance.
