OCIP vs. CCIP insurance: Key differences and how to choose

With a typical construction insurance plan, each contractor and subcontractor brings their own insurance policy to the table, building the costs into their bids. They also file their own individual claims with their insurers if something happens on the job.

Controlled insurance programs (CIPs) offer a centralized alternative to this sometimes-unruly system. This single policy covers everyone and replaces that patchwork of separate insurance plans.

Where it gets tricky is choosing between the two main types of CIPs: owner-controlled insurance programs (OCIPs) and contractor-controlled insurance programs (CCIPs). Both come with unique benefits and drawbacks, including costs, coverage, and claim and policy control.

This guide explores these and other differences between OCIPs versus CCIPs to help contractors and operations leaders make the right choice for their needs.

What is a controlled insurance program (CIP)?

A CIP is an insurance program that consolidates liability coverage for all parties on a construction project, from the owner right down to individual subcontractors. Contractors often refer to CIPs as “wrap-ups” because they roll every party on the job, from the owner down to the last sub, under the same coverage.

There are several types of CIPs, but the most common are owner-controlled insurance programs (OCIPs) and contractor-controlled insurance programs (CCIPs).

What is an OCIP in construction?

OCIPs are wrap-up policies obtained and managed by the owner or developer of the project. Like CCIPs, OCIPs typically apply to the owner, general contractor, and subcontractors.

What is a CCIP in construction?

A CCIP in construction is a wrap-up insurance policy procured and controlled by the general contractor rather than the owner. Like an OCIP, a CCIP usually covers the owner, the general contractor itself, and the subcontractors.

What is the difference between an OCIP and a CCIP?

While similar in scope and function, OCIPs and CCIPs differ on several key points.

Policy ownership

The fundamental difference between the two is who secures the policy and is in charge of overseeing it. This party is called the sponsor, and they get to choose the policy and control the claims process. OCIP management falls to the owner, while the contractor owns CCIP management.

Financial responsibility

The policy’s sponsor is also responsible for paying premiums, deductibles, and collateral. This can have significant cash flow implications, depending on how well the sponsor is able to absorb the costs. 

Enrollment and compliance

It’s the sponsor’s responsibility to maintain compliance. That means collecting each sub’s payroll by class code every month and checking the bid credit each sub deducted, which is the dollar amount of general liability and workers’ comp they stripped out of their number because the wrap now carries it. Sponsors also have to track certificates for suppliers that aren’t covered by the wrap-up. These parties have to take out their own policies, and sponsors need to confirm this is done.

The impact of safety records on insurance costs

CCIPs may come with lower premiums if the contractor can demonstrate a strong safety culture and track record by providing supporting evidence. This might include documented safety meetings, job safety analyses (JSAs), or site-specific safety plans.

What do OCIPs and CCIPs cover?

OCIPs and CCIPs typically offer similar types of coverage and optional add-ons, including:

• General liability: This coverage forms the backbone of any wrap-up policy, protecting all enrolled parties if a bodily injury or property damage claim comes up.
• Workers’ compensation: Most wrap-ups pay out benefits if a worker gets injured on the jobsite. Monopolistic states, where employers are required to obtain workers’ comp through the state instead of private insurers, are the exception.
• Excess liability insurance (ELI) and umbrella insurance: ELI increases a policy’s existing coverage ceiling. Umbrella insurance raises the limits too, but it can also expand coverage to fill gaps the base policy doesn’t cover.
• Optional endorsements: Some CIPs offer opt-in supplemental insurance policies. A common example is builder’s risk, which protects the project itself against certain forms of property damage (e.g., vandalism or theft).
• Subcontractors and material suppliers excluded from insurance coverage: Policies often exclude material suppliers and high-risk subs, so these parties have to take out their own insurance. Wrap-up coverage also excludes off-site work, meaning subs need individual policies for any off-site fabrication, transit, or storage work.

OCIP strengths and weaknesses

OCIPs and CCIPs have a lot in common, but that doesn’t mean they don’t come with distinct benefits and drawbacks. First, here’s a look at the core practical strengths and weaknesses that set OCIPs apart.

Strengths

• Time and resource savings: When owners take care of managing the policy, contractors have more time and financial bandwidth to focus on building.
• Economies of scale: Insuring multiple construction projects helps owners take advantage of economies of scale, especially for large, long-term builds. Insurers may be willing to offer better terms because they’re spreading the risk across multiple projects.
• Customizable insurance types and deductibles: Because owners control policy selection, they can tailor plans and deductibles to suit their personal risk tolerance.

Weaknesses

• More financial exposure: Owners take on more financial risk because they’re responsible for premiums, deductibles, and collateral costs.
• Potential preconstruction delays: Procuring and implementing an insurance program can be time-consuming, especially if the owner has limited experience managing insurance policies. If setup takes longer than expected, the project’s start date will likely have to be pushed back.
• Coverage gaps: OCIPs may not include certain types of coverage, such as commercial auto insurance. If a party needs them, they’ll have to take out a separate policy.

CCIP strengths and weaknesses

CCIPs also have unique benefits and pitfalls, including the following.

Strengths

• Potential savings through a strong safety record: Contractors may be able to secure lower premiums if they have a good track record of workplace safety. Insurers tend to be more willing to negotiate favorable terms when they view a contractor as less risky.
• Faster issue resolution: Direct access to claims allows for a more streamlined claims process. Communication and coordination tend to be smoother because the contractor only has to work with one insurer for core coverage instead of juggling several.
• Fewer insurance coverage gaps and conflicting terms: A single insurance policy means there’s little ambiguity about which policies apply to which claims.

Weaknesses

• Greater administrative burden: Managing an insurance policy can be complex. The additional overhead can take contractors away from the actual construction work they’re getting paid to oversee.
• Steeper learning curve: Contractors with limited prior CCIP experience may struggle to come to grips with the ins and outs of running a wrap-up program. This can lead to expensive compliance mistakes or coverage oversights that don’t surface until a claim turns up.
• Exposure to claims-driven premium increases: Contractors are directly exposed to premium spikes as the number of claims increases, creating more financial risk than a traditional insurance policy.

Choosing the right insurance program: What to think about

Weigh these factors to work out whether an OCIP or a CCIP best fits a particular construction project:

• Project size and complexity: Major projects expected to span several years may be better suited to OCIPs because economies of scale help owners negotiate better terms. 
• Contractor experience and safety record: If the contractor has an excellent and provable safety record, they may be able to save money with a CCIP by landing lower premiums.
• Financial capacity: Since the policy’s sponsor is responsible for premiums, deductibles, and collateral, a key consideration is which party is better equipped to absorb the financial impact. Hefty collateral requirements and increasing premiums can squeeze cash flow and strain the budget.
• Risk tolerance and control: Not everything comes down to finances. If the owner isn’t comfortable handing over policy selection and claims management to the contractor, an OCIP is likely the better choice.

Simplify OCIP and CCIP tracking with Miter

In the end, choosing between an OCIP and a CCIP boils down to who should maintain control and who can most comfortably bear the cost burden. Regardless of the final decision, however, contractors still have to track job payroll and keep it out of standard workers’ comp reporting. Otherwise, they risk double-counting premiums already covered under the wrap-up policy.

This process can be painstaking and error-prone, especially with manual methods or generic software that wasn’t designed for contractors. Between keeping up with safety compliance and keeping tabs on wrap-up work, that’s a lot to take on by hand.

In Miter, workers’ comp codes and rates are set by job or cost code, so hours on a wrapped job stay coded to the wrap and out of the workers’ comp report your carrier audits. The wrapped payroll stays separate in job costing without a second spreadsheet.