This post is part of a series sponsored by TSIB.
Real estate development is a business process that focuses on the overall development and renovation of a property, whether it is an existing property or a brand new property. When it comes to real estate development, it is important that the correct insurance is taken out before the project begins. Finding the right insurance program is important to the overall success and efficiency of the project.
There are two main types Summaries:
- OCIP (Owner Controlled Insurance Program)
- CCIP (Contractor Controlled Insurance Program)
Both wrap-up types have their own challenges and benefits:
OCIP challenges
An OCIP consists of the owner being responsible for the program. An OCIP requires the owner to provide collateral, which can sometimes include a 100 percent upfront payment of any premiums and expected losses, a letter of credit, or cash security. In these cases, the owner must also hire one Wrap administrator to reduce the paperwork involved. The owner must also address the claims management process after a project is completed, which can take between 5 and 10 years in total, so any savings and losses cannot be determined until all claims are settled.
CCIP challenges
With a CCIP, the general contractor (GC) has overall responsibility for the program. This means that all project risks lie directly with the GC. The GC is responsible for processing subcontractor registrations, assisting with all administrative paperwork, and managing project claims. Setting one Wrap administrator can help limit the administrative pressure placed on the GC. In the claims management process for a CCIP, the owner may close its books when the project is complete as the GC is responsible for this activity.
OCIP benefits
With an OCIP, the owner will be the provider of many of the program’s benefits, including the following:
- Damage control
- Availability of coverage
- Improved and even coverage
- Reduced litigation
- Cost control
- Improved security
CCIP benefits
In a CCIP, the GC receives many of the program benefits, including:
- The premiums include all costs – variable and fixed
- Strong return-to-work programs
- Consistent risk transfer across all documents
- Warranty costs – no deductible
- Established crisis management protocols
If you choose OCIP or CCIP as a real estate developer, the main goal is to give you overall peace of mind that your project is well protected. If you have further questions about the challenges and benefits real estate developers face between a CCIP and an OCIP, Contact TSIB today!
Was this article valuable?
Yes No
Here are other articles you might like.
The most important insurance news in your inbox every business day.
Get the insurance industry’s trusted newsletter
Source link
2024-04-01 20:19:49
www.insurancejournal.com
