Contractor Controlled Insurance Program (CCIP): Cost & Providers

Many contractors provide insurance to their employees. This benefits the contractor who is able to cut payroll costs, but it can also result in decreased worker protection and higher premiums for those without a plan.

The “ccip insurance cost worksheet” is a spreadsheet that can be used to calculate the cost of different types of insurance. It also has a list of providers for each type of insurance.

General contractors acquire a Contractor Controlled Insurance Program (CCIP) to coordinate general liability for construction projects. CCIPs, also known as wrap-up insurance, are managed by contractors rather than project developers. The cost of a CCIP begins at 1% of the construction expenditures, with policy terms that continue beyond the conclusion of the project.

CCIP plans are complicated, and a general contractor needs an insurance partner he or she can trust to thoroughly assess project risk, total business risk, and cost-cutting opportunities. To get permits and satisfy contract requirements with developers, every development requires insurance. CCIP is more comprehensive than Insurance for Contractors, therefore weigh the advantages and disadvantages of both for your future real estate development project.

Providers of Contractor-Controlled Insurance Programs

Finding the finest CCIP pricing policy provider necessitates finding one that is willing to take on the unique project risks. Some carriers favor typical CCIP plans that cover major developments with construction expenses above $50 million, while others cater to smaller building projects.

The Best CCIP Providers

The following are four of the best CCIP insurance companies:

Alliant No. 1

Alliant is a national leader in key industry insurance programs, such as those for agriculture, aviation, and petroleum. To diversify risk and effectively safeguard significant projects, it provides individually underwritten programs as well as co-brokered insurance. Risk Control Consulting is another part of Alliant that assists with customizing policies and mitigating lesser-known hazards.

General contractors with expertise managing a project with a CCIP might consider Alliant. 123OCP, Alliant’s exclusive online quote and bind system for major contractor’s projects, features a shortened underwriting procedure for qualifying projects. This program must be written on Admitted “A” Rated Paper that meets the most stringent credit requirements.

2. USI

USI is a global brokerage that defines risks using proprietary analytics while providing local support and innovation to significant projects. For company owners, USI provides insurance, financial services, and employee benefits, making it simple to have everything covered under one roof.

USI is the best option for projects with worldwide exposure, whether from owners or contractors, and that need protection from a variety of perspectives. USI underwriters are best equipped to create risk mitigation strategies that eventually minimize the total cost of insurance and risk management by employing local resources at the project site.

3. AIG

AIG is the world’s leading provider of Property Insurance for Businesses. AIG provides commercial insurance for many types of businesses, but has unique plans for contractors, builders, and real estate developers. AIG is one of the world’s most financially sound insurance companies, allowing it to support projects of all kinds.

General contractors looking for up to ten years of unbroken coverage with various projects on revolving budgets can choose AIG. This enables the contractor to start one project while closing up another and change CCIP conditions without having to rewrite the whole policy.

4. Chubb

Chubb is the world’s biggest property and liability insurer, offering a wide range of commercial insurance products, including CCIP. Chubb’s products are distributed via brokers and independent agents, providing a local touch as well as globally renowned risk knowledge and underwriting discipline.

Chubb is an excellent alternative for a general contractor looking to grow into a new market and benefit from Chubb’s risk engineering expertise. This additional layer of risk management aids in the customization of solutions to avoid claims. Chubb considers any project, whether it’s a mixed-use complex or a new local hospital, to be a separate risk class.

What Is A Contractor-Managed Insurance Plan?

A Contractor Controlled Insurance Program (CCIP) is a customized insurance coverage that covers projects in progress. The insurance is purchased by a general contractor to cover the project, his firm, and any subcontractors under a single general liability policy. The developer, often known as the owner, is mentioned as an extra insured and is covered by the insurance.

To safeguard parties, a CCIP insurance scheme must be in place before work begins. It lasts the duration of the project and typically extends years beyond the completion date of the building. This amount of time is often the same as the state’s statute of repose (akin to a statute of limitations), which requires claims to be submitted before the deadline.

What Is Covered by CCIP Insurance?

Controlled Insurance for Contractors Programs are built in response to contract requirements, with several developers working on various projects at the same time. The underwriting procedure must take into account the budget as well as all coverage needs. Subcontractors bid on project completion conditions before the insurance carrier determines the total budget coverage.

Statements of coverage are precisely stated with policy premiums credited or passed down since the CCIP is a customized policy insured for the unique requirements of a general contractor participating in one or more significant development projects. If the CCIP provides coverage in return for bid proposal credits, subcontractors’ costs are reduced since they do not need additional insurance. It’s also feasible to pass the premium on to subcontractors, lowering their costs.

Advantages of CCIP

The following are some of the benefits of having a CCIP policy that covers all contractors on the project:

• Reduce the number of insurers: Having only one insurer eliminates insurance gaps and the need for protracted litigation or subrogation to find the accountable subcontractor.
• Cost Savings: By keeping a single insurance policy, subcontractors are relieved of the requirement to get their own, resulting in lower overhead that trickles up into the project budget.
• Control of Insurance: Project management maintains control of insurance by projecting all levels of risk from the best vantage point possible.
• Adequate Limits: Assures project owners that the project is fully covered from top to bottom, including all subcontractors.
• Larger Contractor Pool: Project managers may allow bidding from a larger pool of subcontractors by not requiring them to carry their own insurance.
• Claims Management: Having a single policy lowers the number of policies that may need to be managed.
• Reduced Subrogation: By consolidating policy coverage, the general contractor’s insurance does not need to subrogate to a subcontractor’s policy.

CCIP’s drawbacks

The following are some of the drawbacks of having a single CCIP policy for a project:

• Extended Subcontractor Negotiation Procedure: After the original quote is provided by subcontractors, general contractors must add the process of pricing the insurance.
• Difficult Change Order Process: Because insurance is priced based on contractor final bids, a change order affects insurance cost and must be authorized.
• Cost of Administration: The cost of subcontractor and CCIP cost administration must be included into the project’s overhead.
• Inadequate Coverage: Projects that exceed their budget run the danger of not having enough liability insurance to cover big claims.
• Premium Credits May Not Be Enough to Cover Deduction: Premium credits offered by subcontractors may not be enough to cover the project’s entire budget.

The Coverage Pyramid

The CCIP protects everyone from the top down in what is called the The Coverage Pyramid. With a CCIP, subrogation is usually waived, meaning there is no longer a need for multiple insurance companies for various contractors to argue over liability responsibility. This means the project owner, general contractor, and all listed subcontractors are protected under the policy provisions while working on the project.

In certain cases, the owner, general contractor, and subcontractors will need their own insurance coverage. Individual business insurance give protection if the CCIP limitations have been reached or if the policy does not cover a particular subcontractor. Some plans are not designed as no-fault insurance, which means that if the subcontractor is proven accountable or irresponsible, he or she may be responsible for deductibles.

CCIP Coverage Example

Consider the case of a strip mall being constructed by NewMalls USA, which owns and funds the project. A general contractor is contracted to execute the actual construction by recruiting and supervising subcontractors for electrical, HVAC, plumbing, framing, foundation, and all other aspects of the work. The plumber’s effort causes a pipe to break, flooding not just the project but also the adjacent art studio. The damages are covered by CCIP insurance.

What the CCIP Doesn’t Include

The Contractor Controlled Insurance Program (CCIP) covers general liabilities on the work site. It does not, however, provide security for builders’ company assets, supplies, and materials used in building projects, nor does it cover business office responsibilities or compensation. It’s worth noting that CCIP doesn’t cover every subcontractor.

The CCIP insurance does not cover the following subcontractors and providers:

• Suppliers
• Suppliers of materials
• Haulers
• Truckers
• Operations that are potentially dangerous (blasting and demolition)

Subcontractors must be identified and their responsibilities on the overall project budgeted separately. For work undertaken on behalf of the project, general contractors must acquire a Certificate of Insurance from excluded subcontractors.

Costs of a Contractor-Controlled Insurance Program

Costs of a Contractor-Controlled Insurance Program often range from one to 2% of the overall construction project budget. Costs will vary depending on the size of the project, the extended tail period duration, and the number of subcontractors on the project.

The following factors influence CCIP costs:

• Premiums are closely linked to the project’s total construction cost.
• Subcontractors’ Insurance: While it is not suggested to pass responsibility to subcontractors, it does lower the total cost of coverage.
• Deductible: Larger deductibles indicate that the project has a higher Self Insured Retention, which lowers the possible claim payment.
• Duration of Coverage: The term of indemnity is a post-project insurance that covers contractors and owners; the longer the period of indemnity, the more expensive the coverage.
• Companies and contractors having a history of claims will pay a higher premium for coverage and protection.

CCIP Premium Credits

Premium credits are earned by the contractor for keeping the master insurance policy in good standing. The cost, deductible, and any penalties for insurance are determined by the general contractor, as well as who is accountable for them. Maintaining the CCIP master policy has the purpose of lowering subcontractor overhead expenses, lowering the project bid price. These are regarded as contractor credits.

Who Should Get CCIP Insurance?

Historically, a CCIP strategy was only applied to significant projects with construction expenditures above $50 million. While this program is now accessible for projects of all sizes, it is not necessarily the most cost-effective option. A CCIP should be in place for a project owner worried about prolonged project liability in order to safeguard his interests in maintaining the project on track and on budget.

Common questions to consider when acquiring a CCIP, according to risk management specialists IRMI:

• Are there any suppliers or contractors that aren’t allowed to participate?
• What are the specific areas that are covered?
• Are subcontractors’ insurance policies promising not to subrogate?
• Which time frames are covered and which are excluded?
• What is the relationship between normal insurance for general contractors and subcontractors?
• Is it possible to deduct premiums, and if so, how are they calculated?

It’s critical to address these issues from the start of the policy, when current subcontractors already have dependent contract awards in place.

Other Business Insurance and CCIP

Contractor-managed insurance packages aren’t comprehensive enough to cover all sorts of risk. Other insurance coverage may be required by contractors and owners to adequately protect against property damage, business disruption, and staff injury.

Insurance for Contractors

Insurance for Contractors protects the construction site contractor from the loss of tools, materials, or structural damage during the course of construction. It pays for damages resulting from perils including fire, theft, and vandalism. Policies may extend to mobile work trailers and sheds. Some Insurance for Contractors policies also cover supplies while in transit.

For example, a general contractor working on ten condos comes to the construction site after a long weekend to discover that someone has broken in, smashed pallets of drywall and two-by-fours, and flipped a cement mixer. Under builders risk, this is a covered loss.

General Liability Insurance for Businesses

General Liability Insurance for Businesses covers third-party bodily injury, property damage, and related legal costs in the case of an accident. General liability insurance protects the small business from slip-and-fall accidents or other accidental claims to consumers or public property. CCIP covers the general liability on the site, but there may still be office-related claims that are not covered.

For example, if a third party, such as a client, is harmed on your property, a general liability coverage will cover the ensuing medical expenditures. If the matter proceeds to court, it also covers the expenses of legal defense.

Property Insurance for Businesses

Property Insurance for Businesses protects a small business against losses due to fire, theft, and vandalism. Builders risk should cover most claims for the business property at the job site but other tools, office locations, and materials may need additional coverage. Commercial property coverage also protects furniture, computers, materials, supplies, and inventory.

For example, a general contractor who maintains a business office all year long would need Property Insurance for Businesses to cover the office building and its contents against fire, theft, and other losses.

Insurance for Workers’ Compensation

Any business with employees must maintain Insurance for Workers’ Compensation to pay for costs associated with an employee injured on the job. Insurance for Workers’ Compensation pays for medical bills, lost wages, and rehabilitative services for employees injured at work. Most general contractors hire subcontractors but may still have office support staff or maintain extended coverage for subcontracts without their own Insurance for Workers’ Compensation.

For example, a general contractor has an office clerk who gets hurt while moving a box of supplies in the site office. This becomes a workers’ compensation claim. If Insurance for Workers’ Compensation is not in place, this is the general contractor’s financial responsibility.

Umbrella Insurance for Businesses

A Umbrella Insurance for Businesses policy provides extended liability coverage for liabilities including general liability, commercial auto, and Insurance for Workers’ Compensation. Insurance carriers differ on how an umbrella extends coverage for a CCIP policy. Be sure to talk to your insurance agent about the aggregate coverage.

For example, if the firm has $1 million in general liability coverage and another $1 million in umbrella policy, it is insured for liability claims up to $2 million. The general liability insurance would cover the first $1 million of a $1.5 million claim, with the umbrella coverage covering the remaining $500,000.

When Getting CCIP Insurance, Here Are Some Pointers

There are a lot of moving pieces in major building projects, and there are a lot of people involved. Obtaining CCIP insurance to cover any risk gaps is critical to the project’s financial success. As a result, it’s critical for small company owners to plan ahead.

When looking for a CCIP insurance package, keep these three things in mind:

1.Consolidate the Contingent Contracts of Subcontractors

Changing the terms and features of a CCIP isn’t as easy as contacting your agent and asking for a different deductible or more coverage. Inform subcontractors that firm bids are required, and get contingent contracts after the project is approved. One of the final things to put in place before breaking ground is insurance.

2.Confirm the Indemnity Period for CCIP Policies.

The indemnification period protects all stakeholders and contractors for a period of time after the project is completed. Confirm how long the CCIP will shield you against liability once the project is completed. The indemnification term should correspond to the state’s statute of repose (equivalent to a statute of limitations) for filing claims.

3. Examine all of your insurance requirements.

More than simply general liability coverage is required for major building projects. Examine the entire demand for builders’ risk, workers’ compensation, and inland marine insurance. Builders risk insures the project’s commercial assets and supplies. Employees injured during work, including subcontractors on big projects, are covered by workers’ compensation. Items in transit, such as materials and supplies, will be covered by inland marine.

Frequently Asked Questions about the CCIP (FAQs)

Every year, millions of dollars are invested in real estate projects, with tens of millions of dollars at stake in possible liability claims. Our goal is to provide you with the best possible solutions to your inquiries.

What is an indemnity period?

The term of indemnity extends the CCIP’s coverage beyond the project’s completion and the time when the insurance policy is in effect. It extends coverage for claims originating from the development of the property to the project’s stakeholders for a certain length of time, up to ten years.

What is the definition of a construction insurance policy?

A Contractors’ All Risk (CAR) policy combines third-party general liability and commercial property damage coverage into one policy. Unlike standard general liability coverage, the CAR covers subcontractors on the project site for unintentional injury or property damage. When numerous policies are in place across various contractors, CAR fills in the gaps in insurance.

Is there a distinction between the CCIP and the OCIP?

The Contractor Controlled Insurance Plan (CCIP) functions similarly to the Owner Controlled Insurance Plan (OCIP) (OCIP). The fundamental distinction is that, although both plans are acquired and maintained by the contractor, the OCIP is controlled by the owner. If a general contractor has numerous significant development projects with various owners, he may have a CCIP.

Conclusion

When it comes to multimillion-dollar development and construction projects and risk reduction, there is no room for mistake. The CCIP is the principal financial safeguard that enables a project owner to proceed with confidence, knowing that third-party general liability claims will be covered. This form of coverage is required for a project with several subcontractors.

The “ccip vs traditional insurance” is a program that allows contractors to have some control over their health care costs. The program works by putting the contractor’s health care dollars in a savings account, and then giving them access to those funds when they need it. With this type of program, contractors are able to choose the providers that they want to use for their health care, rather than being forced into using one provider.

Related Tags

• ocip vs ccip
• how to calculate ccip
• ccip vs builders risk
• ccip program
• ocip insurance