"It’s A Wrap!" Insuring Construction Projects Through OCIPs And CCIPs

Part 1:The Nature of a Wrap Up Program

The traditional mechanism to insure construction projects is to have the construction participants – such as the general contractor, the subcontractors, and the design professionals – furnish their own corporate or practice insurance to protect against project risks. Typically, each participant would include the cost of its insurance, plus a mark-up, in its bid. The breadth of that insurance would be left to each participant to arrange, though generally subject to certain contractual requirements as to the type and amounts of the various coverages. This traditional approach is not without limitations and risks.

Consequently, large construction or infrastructure projects, typically in excess of $100 million, are more and more frequently insured under a Controlled Insurance Program ("CIP"), colloquially referred to as a "wrap up" program. Under a CIP, one of the participants in the project controls the procurement of insurance