insurance

Owner-Controlled Insurance Program

A comprehensive insurance program purchased by a project owner (typically for large construction projects) that covers all contractors and subcontractors working on the project. Also known as OCIP, this arrangement centralizes insurance coverage under one master policy rather than requiring each contractor to maintain separate coverage.

Example

“The city established an owner-controlled insurance program for the new airport construction, providing workers' compensation and general liability coverage for all 47 contractors working on the $2 billion project.”

Memory Tip

OCIP = 'One Company Insures Project' - the owner buys one big policy to cover everyone.

Why It Matters

OCIPs can significantly reduce overall insurance costs on large projects by eliminating duplicate coverage and achieving economies of scale. They also streamline claims handling and ensure consistent coverage levels across all project participants, reducing disputes and delays.

Common Misconception

People often think OCIPs only benefit the project owner financially, but they actually provide better coverage consistency and claims service for all contractors. Another misconception is that contractors don't need any insurance when working under an OCIP, but they typically still need coverage for operations outside the project and certain excluded risks.

In Practice

A $100 million hospital construction project might typically see individual contractors paying $3-5 million combined for various insurance coverages. Under an OCIP, the hospital owner could purchase comprehensive coverage for $2.2 million, saving $800,000-$2.8 million overall. The OCIP would cover workers' compensation, general liability, and excess liability for all contractors, while contractors would still maintain their own professional liability and coverage for non-project work. Claims would be handled through one insurer, reducing administrative costs and improving response times.

Etymology

The term emerged in the 1960s construction industry as large projects sought to consolidate insurance coverage, combining 'owner-controlled' meaning managed by the project owner rather than individual contractors.

Common Misspellings

owner controled insurance programowner-controlled insurrance programowner controlled insurance programownercontrolled insurance program

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