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Real Estate development is a business process that focuses on the overall development and renovation of a property, whether that is an existing property or a brand-new one. When it comes to real estate development, it is important that the proper Wrap-Up insurance is placed prior to the start of the project. Finding the right insurance program is important to the overall success of the project’s efficiency.
There are 2 main types of Wrap-Ups:
- OCIP (Owner Controlled Insurance Program)
- CCIP (Contractor Controlled Insurance Program)
Both of these Wrap-Up types have their own separate challenges and benefits:
An OCIP consists of the Owner being responsible for the program. In an OCIP, the Owner is required to provide collateral requirements, which at times can include 100% prepayment for any premiums and expected losses, a letter of credit, or cash collateral. In these cases, the Owner must also hire a Wrap Administrator to relieve the paperwork burden involved. The Owner must also be engaged in the claims management process even after a project is completed, which can take anywhere from 5-10 years total, allowing for any savings and losses not to be determined until all the claims have been settled.
In a CCIP, the General Contractor (GC) holds the entire responsibility of the program. This means all project risks fall directly on the GC. The GC is responsible for handling the subcontractor enrollments, assisting with all administration paperwork, and managing the project claims. Hiring a Wrap Administrator can help limit some of the administration pressure being put on the GC. In the claims management process for a CCIP, the Owner can close their books when the project is complete since the GC is responsible for this activity.
In an OCIP the Owner will be the provider of many of the program’s advantages, including the following:
- Claims control
- Coverage availability
- Enhanced and uniform coverage
- Reduced litigation
- Cost control
- Improved safety
In a CCIP, the GC will gather many of the program benefits which can include:
- Premiums include all of the costs – variable and fixed
- Strong Return-To-Work Programs
- Consistent risk transfer in all documents
- Guarantee cost – no deductibles
- Established Crisis Management Protocols
As a Real Estate Developer, when choosing either OCIP or CCIP, the main goal is to overall provide you with the assurance that your project is well protected. If you have more questions about the challenges and benefits Real Estate Developers are facing between a CCIP and OCIP, contact TSIB today and speak with one of our Controlled Insurance Specialists!
TSIB’s Risk Consultants are currently servicing the following locations:
East Coast: New York City, NY; Bergen County, NJ; Fairfield County, CT; Philadelphia, PA
Texas: Austin, San Antonio, Houston, Dallas
California: Orange County, Los Angeles County, Riverside County, San Bernardino County, San Diego County