How OCIP/CCIP Policies work.
In defending workers’ compensation claims arising out of an Owner Controlled Insurance Policy (OCIP) or a Contractor Controlled Insurance Policy (CCIP), it is important to understand how these policies work.
OCIP/CCIPs are becoming more and more popular in the construction industry today, especially in large-scale, high-risk projects. OCIP/CCIPs are commonly referred to as “wrap up” policies, a term that is often thrown around in workers’ compensation courts when coverage is being denied. An OCIP is one where the policy is sponsored by the owner of the project, and a CCIP is one where the policy is generally sponsored by the construction manager or general contractor. Both types of policies provide coverage for the entire project, that is, all enrolled contractors, subcontractors and sub-subcontractors.
An OCIP is usually dedicated to one particular project (though there are times when an owner has an OCIP for multiple projects), while a construction manager or general contractor can enroll several projects under its CCIP. The determination of whether there will be an OCIP or a CCIP on a project depends on the parties involved, and who is interested in sponsoring the policy. Some factors that are taken into consideration are the cost of the project, the owner’s and the construction manager’s or general contractor’s relationship with its carrier, and who would rather bear the administration responsibilities.
Why Employers choose an OCIP/CCIP.
OCIP/CCIPs are beneficial to all parties involved, though some benefit more than others. Some of the major benefits of an OCIP/CCIP are: reduction in insurance costs, reduction in litigation (elimination of cross-litigation), prevention of gaps in coverage, efficient claims handling, and reduced risk through a uniform site safety program.
While an OCIP/CCIP covers an “entire” project, there will be several parties working on the project who will not be covered under the policy. For example, those working less than a certain number of hours, those with a contract value under a certain amount, hazardous materials contractors, architects and vendors. Therefore, an OCIP/CCIP requires that all eligible parties enroll in the program. However, enrollment is not automatic, and requires proactive steps by both the eligible party and the sponsor of the OCIP/CCIP. If a party is not eligible, it must have its own insurance policy, and cannot claim coverage under the OCIP/CCIP.
What do Attorneys Need to Know in Defending OCIP/ CCIP Workers’ Compensation Claims?
Since the overarching premise of an OCIP/CCIP is that it covers the “entire” project, it is not uncommon for one to assume that every claim from that project is a covered claim. This is simply not the case. Coverage may oftentimes be contested under an OCIP/CCIP. As noted above, some parties are ineligible for coverage under an OCIP/CCIP. In addition, the accident may have occurred before or after the policy period. Or, the accident may have arisen from an activity that is outside the scope of the policy. In these scenarios, the claim would be denied on the basis of lack of coverage.
In ensuring that the overarching issue of coverage is properly addressed in defending an OCIP/CCIP workers’ compensation claim, the following should be available to the defense attorneys:
- The certificate of coverage (proof of coverage) showing that the employer (contractor, subcontractor or sub-subcontractor) is covered under the policy
- The policy manual showing all of the details of the policy
- Any project completion documentation, if coverage is being contested on the basis that insured’s job on the project had ended prior to the alleged accident;
- The parameters of the project site that is covered by the policy;
- The scope of work covered under the policy;
- The date, location and exact activity being carried out at the time of the alleged accident;
- The claims handling process, to ensure that all information is obtained through the proper channels, and in a timely manner
Ensuring that the attorneys have all of the above available to them from the inception of a claim will allow for quick closure of claims that are not covered by the OCIP/CCIP, thereby reducing litigation costs for the carrier.