Advantages of an Owner Controlled Insurance Program (OCIP)

By Alexis Spoon posted 01-21-2021 02:48 PM


A controlled insurance program is a single insurance plan designed to cover nearly all liability arising from a construction project. CIPs combine the coverage benefits of several key insurance policies normally used for construction projects—including general liability and excess/umbrella liability, into a single policy.


Advantages of an Owner Controlled Insurance Program (OCIP)


OCIPs give school districts the opportunity to retain surplus and cut down on administrative costs being charged by Construction Managers (CMs). These programs also provide premium savings due to group purchasing rather than on a standalone basis.


Limits of Insurance

OCIPs have dedicated limits of insurance for your project.  When using CCIPs or traditional insurance, your project is typically sharing the contractors’ limits with all of the other projects they have going on.


Quality & Continuity of Coverage

In the state of IL, owners have 10 years after substantial completion of a project to file a construction defect claim.  The insurance market and construction industry will change over the next 10 years, giving you little to no control over if your contractors have the proper insurance in place at the time of a claim.



With an OCIP, there is only one policy at play versus your General Contractor and Subcontractors all having separate policies, therefore we have no friction between parties and claims are paid much quicker. The check will also go to you versus the contractors.


Owner is Named Insured

This gives the owner the rights to the policy and claims management.  Owners are then not dependent on the additional insured coverage within a policy they have not reviewed.


Reduced Barrier of Entry for MBE/WBE Contractors

Minority and Women Owned Contractors can sometime struggle to procure proper insurance.  By utilizing an OCIP, it relieves a burden off MBE/WBE contractors and eases any compliance concerns for the school.


Questions to consider:

  • If there is a general liability claim, what say so will I have in how it is handled?
  • Can I guarantee that this contractor will be in business in 10 years?
  • Can I guarantee that this contractor will have the same insurance in 10 years?
  • Do I know that the contractor will not have a loss on one of their other projects that will erode their limits leaving our project exposed?
  • If the amount of losses on this project are lower than estimated by the contractor, do I get money back from the loss fund?


Additional Project Specific Coverages:

  • Builders’ Risk
  • Contractors Pollution Liability (CPL)
  • Owner’s Protective Professional Indemnity (OPPI)


Common Misconceptions:

Managing an OCIP will lead to more administrative work on my plate.

Gallagher takes on all administrative tasks associated with managing the program.  The school district’s workload is close to zero.  We handle all day to day items, including claims management as necessary.  


The cost savings would be minimal.

Insurance placements are a profit center for Construction Managers.  Gallagher recently saved one of our school district clients nearly $1,000,000 by providing them with an Owner Controlled program rather than the Construction Manager’s proposed Contractor Controlled Program. When you bid the project with an OCIP you will receive credits from the contractors and subcontractors to remove their insurance costs. This can also lead to savings.


My Construction Manager’s Traditional Insurance or Rolling CCIP Has Best In Class Coverage.

Although a Construction Manager’s coverage may be best in class today, when it comes to a Completed Operations claim, it comes down to what coverage is in place when the claim is made, which can be up to 10 years after a project is completed.  There is no way to guarantee that the CM will still have the same coverage in place 6 or 10 years down the line.  Utilizing Gallagher’s construction team when we place an OCIP helps to ensure that the coverage placed is as good as or better than that of the CM.


The Limits of my Construction Manager are for my project only.


If your Construction Manager uses traditional insurance or is proposing to add your project to their rolling CCIP, the limits that they hold are not specific to your project, but are shared amongst all the Construction Manager’s projects.  If they have a large loss on one of their other projects, their limits could be eroded and leave your project exposed should a loss occur.


 Alexis Spoon 
Gallagher Public Entity Practice Group