When renovating or constructing a new building, among the voluminous line items of costs are related to insurance. Many owners or contractors utilize various insurance programs when it comes to a new project.
Under builders risk insurance, the provisions of the policy typically only account for property related coverages. This means that if you purchase only a builders risk policy for your project, and there happens to be a slip and fall type of incident; the possible resulting lawsuit would not be covered. You would also want to make sure to purchase an additional general liability policy for the project during the construction phase. There are times when the builders risk insurance company can provide liability coverage, but that would be an exception.
Because builders risk insurance is meant to be property coverage only, here you will find coverages sometimes seen in builders risk type policies:
- Theft of tools and smaller pieces of equipment by others (not party to the contract controlliing the project).
- Building Materials on site waiting to be installed
- The partially completed building would be covered for loss due to fire, wind, & lighting.
- Business Income and Loss of Rents or Receipts
The Owner Controlled Insurance Program (abbreviated term is OCIP) is a mechanism by which an owner or controlling interest can take control of the insurance costs and insurance administration for all of the respective general contractors and sub contractors.
An OCIP can be beneficial due to the fact it can generate a more true bid from the general contractor. For instance, when a contractor is bidding on a project there will be certain costs already built in to the project bid. Part of these costs are due to workers compensation and general liability insurance premiums . In an Owner Controlled Insurance Program, the owner (the one receiving the bid) is the one actually insuring the entire project (subject to policy terms and conditions). There are many other liability related advantages that can be enjoyed by the controlling interest of a building project.
Often times you will hear the term Wrap-Up used for the Owner Controlled Insurance Program.
CCIP is short for the insurance program referred to as The Contractor Controlled Insurance Program. The CCIP Coverage definition is similar amongst most reputable insurance agencies and brokerages and it can be described as: The main general contractor, or the contractor with control, would purchase an insurance program that includes many different policy coverages including almost all of the project’s possible liability.
A wrap up policy is pretty much the same as a CCIP or an OCIP. Usually however, a contractor would purchase a wrap up policy, not the owner of the project.
The Course of Construction Insurance Program is similar, if not identical to Builders Risk Insurance. As in both coverages, the purpose is to provide coverage for the building and the materials for the building phase of the project.
Some of the best overall OCIP Insurance Companies and Builders Risk Insurance Providers
What types of Claims are Excluded?
It is imperative that you review your proposal or policy and double check exactly what coverages you have. If you are not sure, ask your insurance agent and they can tell you (your insurance agent should know the answers to your questions when it comes to Building Program Insurance. Below is an example of the types of claims usually NOT covered under Builders Risk, OCIP, CCIP, COC or Wrap Up Insurance. This is not meant to serve as an entire list of all the exclusions, just a glimpse of some of the items you may want to review. Check your policy or proposal for a full list of details, and ask your insurance agent at the same time.
Click here for more information about flood insurance. Just remember that flood insurance and run off water is usually an excluded type of loss under most insurance policies.