What Is an OCIP Wrap Policy and How Does It Work?

An Owner Controlled Insurance Program (OCIP), also known as a “wrap-up” or “wrap” policy, is a single, master insurance policy initiated and controlled by the project owner for a specific construction endeavor. This approach centralizes insurance coverage for the owner, general contractor, and all enrolled subcontractors under one unified policy. Unlike traditional methods where each party secures individual policies, an OCIP consolidates insurance responsibility for the entire project duration. This means contractors and subcontractors do not need to factor the cost of their individual project-specific insurance into their bids, as they are covered under the owner’s master policy for work performed on the site. The OCIP aims to provide consistent coverage and uniform liability limits.

Key Insurance Coverages in an OCIP

An OCIP typically bundles several types of insurance policies that are essential for construction projects. These usually include Commercial General Liability (CGL), Workers’ Compensation (WC), and Excess Liability or Umbrella coverage.

Commercial General Liability (CGL) coverage within an OCIP protects against claims of bodily injury or property damage to third parties arising from construction operations. This includes incidents on the job site that may affect visitors or adjacent properties. CGL policies in an OCIP often contain provisions for contractual liability, personal injury liability, and property damage.

Workers’ Compensation insurance, a mandatory coverage in most states, provides benefits to employees who suffer work-related injuries or illnesses. Under an OCIP, the owner procures this coverage for all enrolled contractors and their employees working on the site.

Excess Liability or Umbrella insurance provides additional coverage limits above the underlying CGL and Workers’ Compensation policies. This additional layer of protection is important for large construction projects where potential losses could exceed the limits of primary policies. Builder’s Risk insurance is also a common component, covering physical damage to the structure under construction, including materials and equipment, from perils like fire, theft, or vandalism.

The Unified Structure of an OCIP

An OCIP functions as a “wrap” policy by consolidating insurance coverage for a construction project under a single, overarching program. This unified structure means all eligible parties operate under one master policy procured by the project owner, ensuring consistent coverage terms and limits.

This operational model allows for a singular point of contact for insurance administration and claims handling. Claims are processed through a centralized system under the master policy, streamlining dispute resolution and reducing potential cross-litigation. This unified structure ensures all enrolled contractors and subcontractors are covered equally, minimizing coverage gaps or overlaps.

The cost of the OCIP is typically included in the overall project budget, and contractors submit bids that exclude their individual insurance costs. This centralized cost allocation enables the owner to have direct control over insurance expenditures. The OCIP also allows for uniform safety standards and risk management protocols across the project site, fostering consistent loss prevention.

Parties Involved and Their Roles

The Project Owner initiates and sponsors the OCIP. The owner procures the master insurance policy, manages its administration, and is responsible for premium payments and deductibles. The owner also ensures compliance with the OCIP’s terms and oversees its effectiveness.

The General Contractor works directly for the project owner, coordinating activities under the OCIP. The general contractor collaborates with the owner to ensure subcontractors are enrolled and adhere to safety guidelines. Since the OCIP covers their project-specific insurance, general contractors remove individual insurance costs from their bids.

Subcontractors enroll in the program to receive coverage under the master policy. Their participation means they do not need to secure their own project-specific liability or workers’ compensation insurance, allowing them to submit bids that exclude these costs. Subcontractors must comply with the OCIP’s safety protocols and reporting requirements.

The Insurer provides the master policy for the OCIP, underwriting project risks and processing claims. An insurance broker or program administrator often assists the owner in designing, implementing, and managing the OCIP, including facilitating enrollment and ensuring ongoing compliance.