What really drives the decision to go CIP as opposed to traditional insurance? Avoidance of cross-litigation is one of the greatest reasons to sponsor a wrap up. Because of sheer size, length of the project and scope of work, losses will inevitably pile up over the years on any large-scale project. Traditional insurance leaves insurance companies, lawyers, and contractors to battle things out amongst themselves. Survival of the fittest. The amount of time, money, and energy spent trying to navigate courtrooms and legal documents can no doubt prove exhausting. It drains the mind and the pocket of any company or person caught in the crossfire. For those large enough to withstand the hit, they’ll survive. Smaller companies may dissipate.
Relying on the individual policies of the hundreds of contractors that will be on-site injects a great deal of risk into a project. Lapsed insurance policies, inadequate limits, policy exclusions, limited endorsements, and numerous other policy forms will become daunting. Miss something and you could get caught in the middle of a court battle for years. Legal disputes are unfortunately common. Putting aside the cause of loss, the amount of money spent on defense and counsel can be significant.
The basic concept of a wrap-up fends off gaps in coverage among the various subcontractors on the job. CIPs are controlled insurance programs sponsored by either the Owner or the Construction Manager. A CIP insures every subcontractor of every size, and of every tier for on-site activities. There is one General Liability policy supplemented by umbrella policies that come together to offer a much larger amount of insurance protection that could not be obtained by any one contractor. Make the decision to do a bi-line, and your contractors will also be issued their own Worker’s Comp CIP policy that affords them coverage for on-site activity throughout the duration of their time on the job. The singular insurance carrier significantly reduces or eliminates cross litigation. Furthermore, wrap-ups typically include site-safety programs which strive to avoid those accidents in the first place.
CIPs streamline the claims process allowing injured workers to get the help they need in a more simple and efficient manner. The insurance program makes the conditions a win-win for everyone.
About the Author:
Lindsay Ferg is an Account Manager at CR Solutions and is based out of company headquarters in Alpharetta, GA. Follow CR Solutions on Linkedin to stay up to date on our recent insurance risk management articles and insights.