Contractor Controlled Insurance Program (CCIP)

OCIP (Owner Controlled Insurance Program) and CCIP (Contractor Controlled Insurance Program) are broad and all-encompassing insurance policies that usually cover, at a minimum, general liability insurance, worker’s compensation, and excess liability insurance for all contractors and subcontractors on a construction project. An OCIP is sponsored and held by the owner, in contrast to a CCIP, which is sponsored and held by the contractor. The sponsor holds and is directly responsible for securing the appropriate and required insurance coverage.

Putting ‘Contractor Controlled Insurance Program (CCIP)’ in Context

Scenario Overview:

Skyline Urban Development, a prominent real estate developer specializing in value-add projects, has acquired an aging 35-story office tower in Midtown Manhattan, New York City. The building, known as Midtown Tower, was originally constructed in the 1970s and, while structurally sound, requires significant modernization to compete in the current market. Skyline plans to undertake a comprehensive redevelopment of the property, which will include upgrades to the building’s façade, mechanical systems, and interior spaces, as well as the addition of high-end amenities to attract top-tier tenants.

Why a CCIP?

Given the scale and complexity of the redevelopment, Skyline Urban Development decides to implement a Contractor Controlled Insurance Program (CCIP) to manage all the insurance needs during the construction phase. By opting for a CCIP, Skyline—acting as the general contractor—assumes responsibility for securing and managing the insurance coverage for all contractors and subcontractors working on the project.

Benefits of CCIP in This Context:

• Centralized Insurance Management: Instead of each contractor and subcontractor securing their own insurance policies, which can lead to gaps or overlaps in coverage, the CCIP ensures that all parties are covered under a single, uniform policy. This centralization simplifies the insurance management process and provides a consistent level of coverage across the board.
• Cost Efficiency: Skyline anticipates that by purchasing insurance on behalf of all the contractors involved, they can negotiate better rates due to the bulk coverage, reducing the overall cost of insurance. These savings can be significant, especially in a high-cost market like New York City.
• Risk Mitigation: With Skyline controlling the insurance program, they can ensure that all necessary coverages, such as general liability, workers’ compensation, and excess liability, are in place. This minimizes the risk of underinsurance, which is crucial in a redevelopment project that involves extensive demolition, structural changes, and potential exposure to hazardous materials.
• Streamlined Claims Process: Should an incident occur on-site, the CCIP allows for a streamlined claims process. Since all contractors are covered under the same policy, disputes between different parties’ insurers are minimized, resulting in quicker resolution of claims and less disruption to the construction schedule.

Example Scenario:

During the redevelopment of Midtown Tower, a subcontractor accidentally damages a portion of the existing structure while removing outdated mechanical systems. Under a traditional insurance setup, this could lead to complicated claims involving multiple insurers. However, because Skyline implemented a CCIP, the incident is covered under the single, overarching insurance policy. This not only expedites the claims process but also avoids the potential for costly litigation between different parties.

Additionally, when another contractor’s worker is injured during the façade upgrade, the worker’s compensation claim is handled seamlessly through the CCIP, ensuring that the injured worker receives prompt care and compensation, and the project remains on track without significant delays.

Conclusion:

In this hypothetical redevelopment project in New York City, the use of a Contractor Controlled Insurance Program (CCIP) by Skyline Urban Development provides comprehensive and consistent coverage, cost savings, and efficient risk management. The CCIP enables Skyline to maintain control over the insurance process, ensuring that the extensive work required to modernize Midtown Tower proceeds smoothly and with minimized risk, ultimately contributing to the project’s success.