Owner-Controlled Insurance Program (OCIP)

OCIP is the Owner-Controlled Insurance Program. This program is an insurance program that allows property owners to provide coverage for all their contractors, and sub-contractors, during construction projects. It simplifies the more traditional methods of insuring construction workers. The program was widespread until the 2000 housing bubble. In part, it's popularity was due, in part, to the abundance of construction jobs and looser insurance regulations. Even after the collapse of the housing bubble, it still remains a popular option. OCIP has a number of advantages and disadvantages for contractors and property owners alike.

Understanding OCIP

When a contractor works on a construction site, they are subject to all sorts of risk. Traditionally, the property owner required all contractors to obtain insurance that would provide workers' compensation and liability coverage. This protected the owner from liability charges and covered contractors if they became injured on their job and/or if they were sued by a third party. The contractor could chose any insurance that fit the coverage requirements. The owner usually covered at least part of the resulting costs.

On the other hand, the OCIP allows the property owner to buy bulk insurance. The contractors still have to pay the premiums. Every contractor gets the same type of policy, with the same terms and limitations.

What OCIP Covers

OCIP coverage covers all the contractors and sub-contractors who work at a specific job site. Some OCIPs cover several related job sites. The term "jobsite" encompasses the construction site itself, the on-site fabrication shops and related material storage and laydown yards. It does not cover contractors who do most of their work away from the jobsite. The coverage lasts for a fixed period of time, usually somewhere between two and five years.

OCIP coverage is usually customized to suit the needs of the construction project. OCIP will usually include workers’ compensation, worker's risk insurance, employers liability, commercial general liability and umbrella liability. It may also include professional liability coverage for designers and environmental liability.

Advantages of OCIP

For the property owner, the biggest advantage is cost savings. Because the OCIP gets purchased in bulk, the property owner receives a discount. OCIP usually offers more coverage per dollar than the more traditional insurance coverage. This cost savings makes it efficient. The contractors tend to benefit from greater coverage than what they would otherwise be able to get, as well as from better safety standards that OCIPs tend to require. Both parties benefit from the fact that it takes less time for the coverage to take effect, efficient claims service and streamlined bureaucracy in general.

Disadvantages of OCIP

For the property owner, the biggest disadvantage is that premiums are based on the contractor workforce as a whole. This means that if one contractor files too many claims, the premiums will go up for every contractor. Another major disadvantage is that, while the claims service is usually more efficient, this efficiency slows down greatly if too many contractors enrolled in the same plan file claims at once. For contractors, the biggest disadvantage is the fact that the plan is the same for everyone.

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