Large construction projects can benefit from a Controlled Insurance Program (CIP), also known as a “Wrap Up.” In this arrangement, a single party, either the owner (OCIP) or the general contractor (CCIP), acquires consolidated insurance for all participants working on-site during the construction period.
The overall goal of a CIP is to decrease the cost of insurance premiums ultimately pad by the Owner on a project. A CIP seeks to eliminate the cost of overlapping coverages and delays caused by disputes between the participants and, at the same time, protect all contracting parties by bringing the risk of loss from the project within the insurance coverage. Economies of scale attained by merging insurance are meant to reduce the overhead cost generated by multiple and separate policies. Despite this objective, CIPs can be difficult to administer or simply poorly administered and can leave lower tier contractors and suppliers in the dark regarding claims affecting their interests.
I recently published an article about this topic entitled “Scratching the Surface of Controlled Insurance Programs” which will be helpful as a refresher or to the uninformed in the official magazine of USLAW NETWORK, an exclusive national network of law firms of which Dysart Taylor is a member. To read the article, click here.