A Contractor Controlled Insurance Program (CCIP) is a specialized approach to managing insurance risk on large construction projects. This single, unified insurance program is often referred to as a “wrap-up” because it consolidates coverage for multiple parties into one master policy. The CCIP structure is an alternative to the traditional model where every contractor and subcontractor on a job secures their own individual insurance policies.
Defining the Contractor Controlled Insurance Program
A CCIP is an insurance program procured and administered by the General Contractor (GC) or Construction Manager for a construction project. The GC acts as the sole sponsor, purchasing a master policy that covers the general contractor, enrolled subcontractors, and often the project owner as an additional insured. This arrangement shifts the responsibility for securing and managing insurance away from the individual firms working on a large site. The general contractor assumes the financial responsibility for premiums, deductibles, and collateral, building these costs into the project’s overall budget.
Key Components and Coverage Types
The insurance coverage bundled within a CCIP consists of three main components for project participants. Commercial General Liability (CGL) coverage protects against third-party claims for bodily injury and property damage during construction. Workers’ Compensation (WC) provides benefits for employees of all enrolled contractors who suffer work-related injuries or illnesses. Excess or Umbrella Liability coverage provides higher limits of protection above the underlying CGL and WC policies for catastrophic claims. Additional coverages like Builder’s Risk, which covers damage to the structure itself, may be added as an optional component.
How CCIPs Streamline Risk Management
Centralized coverage mitigates risk by ensuring a uniform approach to insurance and safety across the entire project site. A CCIP guarantees that all participating subcontractors have the same policy limits and consistent coverage language, eliminating gaps or overlaps that occur with multiple individual policies. This unified coverage simplifies determining responsibility in the event of an incident, as all claims are processed under a single policy with one claims adjuster. The CCIP structure minimizes the risk of costly litigation between parties, since all enrolled firms are insured under the same program.
The general contractor’s financial stake incentivizes standardized safety and loss control programs. Because CCIPs are often “loss sensitive,” meaning the final insurance cost is tied to the project’s claims history, the sponsor is motivated to enforce rigorous safety standards. This control allows the General Contractor to coordinate safety training, conduct frequent site inspections, and enforce compliance across all trades. Coordinated safety efforts lead to better project risk control and a reduction in workplace incidents.
Advantages for Participants
For the General Contractor, administrative efficiency is gained by eliminating the need to track, review, and verify hundreds of individual insurance certificates. This streamlined process allows for faster project start times and reduced administrative paperwork. Negotiating a single large policy provides cost savings through bulk purchasing power. This often results in more favorable rates and broader coverage than subcontractors could secure individually.
Subcontractors benefit directly by not having to purchase project-specific insurance, which reduces their overhead costs and allows them to submit more competitive bids. Removing the requirement for individual coverage expands the pool of potential bidders to include smaller firms who might otherwise struggle to meet the high insurance limit requirements of a large project. Being covered under the CCIP also provides subcontractors with higher coverage limits than they typically carry, offering greater protection against major claims.
Disadvantages and Potential Pitfalls
A CCIP introduces complexities and drawbacks that require careful management. Subcontractors lose direct control over their policy terms and coverage limits, which are dictated by the General Contractor’s master policy. Subcontractors must still maintain separate policies for coverages typically excluded from a CCIP, such as commercial auto liability, professional liability, and off-site work. This dual compliance requires additional administrative effort to track both their individual insurance and the CCIP enrollment requirements.
The General Contractor takes on a significant administrative burden, including handling enrollment, tracking excluded coverages, processing claims, and reporting performance. There is also a financial risk for the GC, who is responsible for the program’s deductibles and may face increased costs if claims exceed the policy’s limits. Because the CCIP covers claims regardless of fault, it can lead to a higher volume of claims or less incentive for individual subcontractors to limit losses.
Distinguishing CCIPs from Owner-Controlled Programs
CCIPs are often confused with Owner-Controlled Insurance Programs (OCIPs), but the distinction lies in who sponsors and controls the master policy. In a CCIP, the General Contractor is the sponsor, administrator, and party responsible for premiums and risk management on the job site. Conversely, an OCIP is secured and managed by the Project Owner or developer, who assumes the financial burden for the insurance program. The choice between the two programs usually comes down to who wants control over the insurance and safety management functions.
A project owner may choose an OCIP to have direct control over coverage limits and benefit from economies of scale across multiple projects. A General Contractor may prefer a CCIP because their company has more experience in construction risk mitigation, allowing them to tailor the program to their specific safety track record and operational needs.