An Owner-Controlled Insurance Program (OCIP) is a coordinated insurance program for construction development projects. Unlike a traditional construction insurance policy, an OCIP provides eligible participants of a construction project with general liability coverage under one policy. There are pros and cons to an OCIP for your development project. Real estate attorney Bruce E. Turner can provide quality legal guidance and advice about whether an OCIP is right for you.
Key Features of an OCIP
An OCIP provides commercial general liability and can offer workers’ compensation insurance for all participants in a specific project under one master policy. The participants generally include all contractors and subcontractors at every tier that are involved in the on-site construction of the project. However, an OCIP does not cover vendors, suppliers, or material dealers. Decision making under the policy rests with the purchaser of the OCIP, who is typically the project development owner but could be the general contractor. The OCIP covers the life of the specific project, plus an extended completed operations period.
Pros to an OCIP for Your Project
One major benefit to OCIP policies is uniform coverage and limits of liability for all participants. OCIPs also eliminates owner concerns that individual contractors or subcontractors are not covered. An OCIP enables the owner of the development project to consolidate insurance policies into one consolidated program and provides significant benefits for a single entity defense against lawsuits for damages. This is because an OCIP uses one insurance company and one legal firm to handle all claims filed against the policy. Because there is no coverage for cross claims, it eliminates the incentive for plaintiffs’ attorneys to create infighting amongst the defendants.
Cons of an OCIP for Your Project
There are also some potential drawbacks to purchasing an OCIP policy for a development project. One common concern is inadequate limits of coverage for all covered participants. If a participant’s damages exceed the limit of the policy, it can have significant liability issues for the purchaser of the policy. Another drawback of OCIP coverage is that it also excludes contractors that handle hazardous materials such as asbestos or other hazardous waste on your project. One final potential con of an OCIP is uncompensated administrative costs for the policy. If you do decide to move forward with an OCIP, it is important to delineate how the administrative costs of the policy will be handled among all participants to the policy. An experienced real estate attorney can review the details of your development project and help you determine whether an OCIP policy is right for you.
Call a Commercial Real Estate Attorney Now
There are pros and cons to an owner-controlled insurance program for development projects in Texas, and an experienced commercial real estate attorney can help you determine whether an OCIP is your best option for project insurance. Call or contact Bruce E. Turner of Bennett, Weston, LaJone & Turner in Dallas to schedule an appointment to review your construction project today.