A controlled insurance program, also known as wrap-up insurance, provides comprehensive coverage for construction projects. It allows contractors and project owners to consolidate various insurance coverages into a single quote for all eligible parties involved.
Furthermore, CIPs help policyholders minimize liability across contractors and subcontractors. In essence, if you’re involved in a construction project, a controlled insurance program (CIP) is the optimal insurance solution for coverage.
Moreover, rather than purchasing separate policies for contractors and subcontractors, a CIP offers all-in-one coverage, simplifying the insurance process. This means that a single insurance quote covers all individuals working on the project.
How Does A Controlled Insurance Program Work?
In a controlled insurance program (CIP), also referred to as wrap-up insurance, multiple contractors and subcontractors involved in a construction project obtain coverage under a single, centralized insurance policy.
This approach streamlines the insurance process, eliminating the need for individual policies for each participant. Typically, the project owner or general contractor takes the lead in setting up the CIP in coordination with insurance brokers and carriers.
Contractors and subcontractors enroll in the program, providing the necessary information for premium calculation. The cost of participation, known as the premium, may be included in the project budget and shared among the involved parties.
Throughout the project’s duration, the CIP provides coverage for various risks, including general liability and workers’ compensation. In the event of a claim, the CIP insurer handles the claims process, ensuring consistent coverage and efficient resolution for all project participants.
In all, a Controlled Insurance Program works by centralizing insurance coverage, simplifying administration, and providing comprehensive protection for construction projects and their stakeholders.
Types Of Controlled Insurance Programs (CIPs)
There are two types of CIPs: Contractor-controlled insurance programs, also known as CCIPs, and owner-controlled insurance programs, known as OCIPS. As for the CCIPs, they provide risk management for parties who are involved in the project.
While owner-controlled insurance programs are considered an alternative to contractor-controlled insurance programs, For this type of insurance, the insurance is managed by the property owner or project instead of the contractor.
What Does CIP Cover?
This insurance policy covers the entire liability as well as the losses during a construction project or multiple projects.
Also, everyone working on the project or projects will receive coverage and protection from this policy or quote.
What Does CIP Not Cover?
Although CIP consists of different insurance policies, every quote has its exclusions. In other words, while the insurance policy encompasses a lot of coverage, it also has incidents it doesn’t cover. They include:
- Physical damage.
- Intentional acts.
- Surety bonds.
- Auto insurance liability.
- Third parties are working off-site.
- Preexisting conditions.
- Third parties, like transportation companies, work occasionally.
But do not conclude that all controlled insurance programs are the same. This is why you must go through your policy terms before agreeing.
Who Needs Coverage?
If you are a general contractor, subcontractor, or project owner, then you need a controlled insurance program, especially if you are in charge of large construction projects.
How Much Does A Controlled Insurance Program Cost?
The price of CCIP insurance varies by project. However, the cost usually starts at 1% of the total price of the project.
While most times the cost starts at 1%, it is also influenced by numerous factors. The factors encompass the percentage of risk involved, the type of program selected, the quantity of contractors and subcontractors involved, and the scale of the project.
Additionally, considerations such as policy duration, prior claims records, policy limits, and insured value are integral components in determining the overall cost.
How To Buy A Controlled Insurance Program
Acquiring a controlled insurance program may seem daunting, particularly for newcomers or those unfamiliar with the process. However, with guidance from this section, navigating the purchase or acquisition of a controlled insurance program can be straightforward. So, here’s what you need to do:
Firstly, reach out to an insurance company, agent, or broker. Their expertise will assist you in determining the most suitable type of coverage and program for your project.
Additionally, various lenders offer quotes, so it’s essential to compare policies based on coverage limits, terms, costs, and other pertinent factors.
You can procure a quote through online platforms, in-person consultations, or by phone, either directly through a broker’s office or from a local insurance agent.
