Page 258 - Urban Construction Project Management

Insurance and Bonds 213
OWNER OR CONTRACTOR CONTROLLED
INSURANCE PROGRAMS

For a large construction project being built in the urban environment, a wrap-up insur-
ance program is often evaluated for the project. The wrap-up insurance can be provided
either by the owner, OCIP, or by the contractor, CCIP. When a project is in excess of
$50 million, a wrap-up policy may be economically advantageous for the project.

The wrap-up policy takes the place of all of the individual insurance policies that the
owner, CM/GC, and subcontractors would normally provide to cover their contractual
requirements, risks, and the construction work. The concept is the same, whether the
owner or contractor procures the wrap-up insurance policy for the project—to provide
one umbrella insurance policy for the entire project that will cover all parties. A wrap-
up insurance policy requires someone on the CM/GC’s staff to administer the program.
This person would sign up subcontractors prior to the start of the construction work,
track insurance credits in the subcontractor’s base contract and change orders, gather
certified payrolls to submit to the insurance carriers to keep track of labor categories
and hours expended to perform the work, send accident and incident reports to the
insurance carrier, send supporting documentation regarding an accident or incident to
the insurance carrier, arrange for witnesses and supervisory personnel to be called in to
testify if there is any litigation, and so forth. The CM/GC needs to ensure that a quali-
fied insurance administrator is on staff to be able to perform the required functions and
provide the proper interface with the wrap-up insurance carrier. This is an additional
cost to the general conditions of the project (See Chapter 17).

This one-stop insurance shopping has many benefits to the project, owner, CM/GC, and
subcontractors. Exhibit 10-3 summarizes the advantages of a wrap-up insurance pro-
gram provided either by the owner (OCIP) or by the contractor (CCIP).

Exhibit 10-3
1. Provides insurance coverage for all parties working on the site through one insur-
ance carrier and policy (watch out for certain unions that require their members to Advantages of a
be covered under the union’s workers’ compensation insurance program). wrap-up insurance
2. Combines insurance coverage, safety coordination, and claims reporting into program (OCIP or
one comprehensive process for all parties working on the site. CCIP).
3. Can result in savings in insurance premiums for the overall project, especially
based on the economy of scale.
4. Usually has less exclusion than coverage found with individual CM/GC, owner,
subcontractor, and consultant’s policies.
5. It provides a uniform and enforceable level of insurance coverage and a safety
program associated with it for the project.
6. It challenges all involved parties with the opportunity for prevention and
mitigation of any accidents, incidents, and potential damages.
7. Reduced litigation in the event of a claim, with only one insurance carrier
involved with insurance coverage and handling of claims.

(Continued)