Large construction projects usually involve multiple parties, including the general contractor, subcontractors, project owners, and developers. It’s common for these parties to carry their own insurance protection against property damage or injury claims. The subcontractors usually pass their insurance costs to the general contractor. Even so, there may still be coverage gaps resulting in some parties not having enough insurance to mitigate all risks. As a general contractor, you may find a contractor-controlled insurance program (CCIP) more effective in covering all the liability arising from your project. Here’s a look at how CCIP works.
What Is CCIP?
Contractor controlled insurance program (CCIP) is an insurance solution sponsored by a general contractor to provide consolidated coverage for multiple contracting parties in a construction project.
How Does CCIP Work?
The insurance program controller, usually the general contractor, purchases an insurance policy that covers the general contractor, all subcontractors, and the project owner against liability risks associated with the construction work. CCIPs provide the following coverages:
- Commercial general liability (GL): Having a CCIP protects enrolled entities against bodily injury and property damage claims arising from their work at the job site.
- Commercial umbrella coverage: This CCIP component extends protection beyond the limits of your GL policy. For example, you may be able to increase your GL limit from $1 million to $10 million.
- Workers’ compensation insurance: You need this insurance to cover all employees working for you and the various contractors under you for on-the-job injuries or illnesses.
CCIP has the following key attributes:
- Bundles multiple liability coverages into a single policy
- Covers multiple parties to a construction project contract
- Coverage lasts for the project’s duration
- Covers claims/incidents occurring at the covered project’s site over the project’s duration
- Covers post-construction liabilities for a specified period stipulated by your state’s statute of repose
Who Does CCIP Cover?
Covered entities include:
- General contractor
- Subcontractors
- Engineers
- Architects
- Developers
Who Needs CCIP Insurance?
You should consider getting CCIP to efficiently maximize insurance coverage if you’re a contractor who has contracted other contractors or companies to work for you on a construction project.
Benefits and Challenges of Having CCIP
CCIP generally makes liability risk management less stressful for the policyholder. It simplifies the claims process as the program sponsor deals with fewer insurers, lawyers, and defendants. The consolidated insurance package offers the following advantages:
- Eliminates coverage overlaps arising out of multiple parties and their insurers covering the same risks
- Eliminates coverage gaps from some contractors not having sufficient liability insurance
- General contractors can save on insurance premiums by consolidating coverage
- Streamlined risk management as the sponsor is the sole policyholder
- The general contractor is incentivized to maximize site safety to minimize insurance costs
Some of the challenges associated with having CCIP are:
- Potentially higher administrative costs, since one party has to ensure that all other parties have sufficient coverage for all identified project risks
- CCIPs may be unsuitable for small-scale projects due to the high costs
- CCIP coverage usually leaves out some key players in a construction project, such as vendors
- Program sponsors generally pay more out of pocket (deductibles) before liability coverage can kick in
- Project-specific CCIPs don’t protect contractors from risks arising out of other projects in which they’re involved
How Are CCIPs Different from OCIPs?
Unlike CCIP, an owner-controlled insurance program is sponsored by the project owner. The property owner gets this coverage to avoid paying out of pocket for liabilities caused by all the contractors involved in the project. Generally, CCIPs and OCIPs offer policyholders similar protections and risk management benefits.
These are the key benefits of having a contractor-controlled insurance program. As a general contractor, consider getting CCIP to eliminate coverage gaps and minimize overheads. For more information on consolidating liability coverage for large construction projects, contact our experts at Modab Insurance Services. We are happy to assess your CCIP coverage needs and help you address them in a cost-effective way.
