How wrap-up (OCIP) insurance simplifies large construction projects

Large construction projects are complex by nature. Multiple contractors, subcontractors, suppliers, and workers all converge on a single site, each bringing their own risks, responsibilities, and insurance policies. Coordinating coverage across dozens of parties creates administrative headaches, coverage gaps, and potential liability nightmares that can derail timelines and budgets.

Owner-Controlled Insurance Programs (OCIP), commonly known as wrap-up insurance, offer a streamlined solution. Instead of each contractor managing separate policies, the project owner purchases a single, comprehensive insurance program that covers everyone involved. This approach reduces costs, simplifies administration, ensures consistent coverage, and protects all parties under one unified policy.

This article explains what OCIP insurance is, how it works, the benefits it provides for large construction projects, and why choosing the right insurance partner is critical to making wrap-up programs successful.

What is OCIP (wrap-up) insurance?

OCIP, or Owner-Controlled Insurance Program, is a consolidated insurance policy purchased by the project owner to cover all contractors, subcontractors, and workers on a construction site. Rather than requiring each party to carry their own general liability, workers’ compensation, and other coverages, the owner secures one master policy that “wraps up” everyone under a single umbrella.

This type of insurance is most common on large-scale projects (typically those valued at $50 million or more) such as hospitals, universities, stadiums, commercial developments, and infrastructure projects. However, smaller projects can also benefit from wrap-up programs depending on their complexity and duration.

OCIP typically includes general liability insurance, workers’ compensation, employer’s liability, and excess liability coverage. It may also include builder’s risk insurance, which covers damage to the structure during construction. The policy remains in effect for the duration of the project and often includes a completed operations period that extends coverage for a set number of years after project completion.

How does OCIP work in real life?

For example, a city planning to build a new airport terminal might use OCIP to insure the dozens of contractors involved – electrical, plumbing, HVAC, structural, landscaping, and more. Instead of coordinating separate policies and verifying coverage from each contractor, the city purchases one policy that protects everyone, streamlining administration and reducing overall insurance costs.

How OCIP differs from traditional construction insurance

In traditional construction insurance, each contractor and subcontractor purchases their own general liability and workers’ compensation policies. The project owner then requires proof of insurance from every party before work begins, verifying that coverage limits meet project requirements and that the owner is named as an additional insured.

This approach has several drawbacks. First, it’s administratively burdensome: tracking certificates of insurance, ensuring renewals, and confirming adequate coverage for dozens of contractors consumes significant time and resources. Second, coverage can be inconsistent. Different contractors may have different policy limits, exclusions, and endorsements, creating gaps that leave the owner exposed. Third, it’s often more expensive. Each contractor includes the cost of insurance in their bids, and those individual premiums typically add up to more than a single wrap-up policy would cost.

OCIP flips this model. The project owner purchases one comprehensive policy that covers all enrolled contractors. Contractors exclude their general liability and workers’ compensation costs from their bids since the owner is providing that coverage. This reduces bid prices, ensures uniform coverage across the project, and eliminates the administrative burden of managing multiple policies.

However, OCIP isn’t always the right choice. Smaller projects, generally those under $50 million, may not generate enough cost savings to justify the upfront investment and administrative complexity. Additionally, some contractors prefer to maintain their own insurance to protect their experience modification rates (EMR) and maintain control over claims handling.

A university constructing a new research campus with a project value of $200 million might choose OCIP to cover the 40+ contractors involved. By doing so, they reduce total insurance costs by 2-3% of the project value (a savings of $4-6 million)  while ensuring consistent, comprehensive coverage across every phase of construction.

Key benefits of OCIP for construction projects

Wrap-up insurance provides significant advantages for large construction projects, benefiting owners, contractors, and the project as a whole.

• Cost savings through bulk purchasing and reduced premiums: when an owner purchases insurance for an entire project, they benefit from economies of scale. Insurance carriers offer better rates for large, consolidated policies than they do for dozens of individual policies. Contractors can submit lower bids because they’re not marking up insurance costs, and the owner avoids paying for overlapping coverage. Studies show that OCIP can reduce total insurance costs by 1-3% of the project value – savings that quickly add up on multi-million-dollar projects.
• Streamlined administration and reduced paperwork: instead of tracking certificates of insurance from every contractor and subcontractor, the owner manages one policy. This eliminates the need to verify coverage, chase renewals, or deal with policy lapses. It also reduces disputes over which contractor’s insurance applies when an incident occurs.
• Consistent coverage and elimination of gaps: with OCIP, everyone on the project site is covered under the same policy with the same limits and terms. There are no gaps caused by conflicting exclusions or inadequate coverage from a subcontractor. This uniformity protects the owner from lawsuits and claims that fall through the cracks of fragmented coverage.
• Centralized claims management and faster resolution: when an accident or injury occurs, there’s no question about which insurer handles the claim. The OCIP administrator manages all claims from a single point, ensuring faster processing, consistent handling, and better outcomes. This reduces disputes, speeds up resolutions, and keeps projects on schedule.
• Improved safety and risk management: OCIP policies often include robust safety programs and on-site loss control services. Insurance carriers provide safety training, conduct regular inspections, and enforce safety protocols across all contractors. This leads to fewer accidents, lower claims, and a safer work environment – benefits that extend beyond the project itself.

A developer constructing a mixed-use tower in downtown San Francisco implemented OCIP for their $150 million project. They saved $3 million in insurance costs, reduced administrative burden by 60%, and saw a 25% reduction in recordable incidents compared to their previous projects – all thanks to centralized coverage and enhanced safety programs. 

Key components covered under OCIP

OCIP policies are comprehensive and designed to address the full spectrum of risks on a construction site. 

Coverage within OCIP	What it covers	How it simplifies large projects
General liability insurance	Third-party bodily injury and property damage	Centralizes liability coverage for all enrolled contractors, eliminating coverage gaps and finger-pointing between policies
Workers’ compensation insurance	Medical costs and lost wages for injured workers	Replaces multiple subcontractor policies with one program, reducing administrative complexity and cost variability
Employer’s liability insurance	Employee lawsuits beyond workers’ compensation	Provides consistent protection across all trades, avoiding uneven risk exposure between subcontractors
Excess liability coverage	Losses exceeding primary liability limits	Ensures a single, high-limit safety net for catastrophic claims on large, high-risk projects
Builder’s risk insurance	Damage to the structure during construction	Aligns property protection with the OCIP, preventing coverage conflicts and delays after a loss

These coverages work together to create a comprehensive safety net, protecting the project owner, contractors, workers, and third parties from the financial consequences of accidents, injuries, and property damage.

Who benefits from OCIP?

OCIP provides value to multiple stakeholders on a construction project, each benefiting in different ways.

Project owners

Project owners gain cost savings, simplified administration, consistent coverage, and protection from liability gaps. They also benefit from improved safety outcomes and fewer disputes over insurance issues. For owners managing long-term, high-value projects, OCIP offers peace of mind and financial predictability.

General contractors

General contractors avoid the complexity of verifying subcontractor insurance and chasing certificates. They benefit from centralized claims handling and reduced administrative burden, allowing them to focus on project execution rather than insurance logistics.

Subcontractors

Subcontractors can submit more competitive bids because they’re not including general liability and workers’ compensation costs. They also benefit from uniform coverage and access to safety programs they might not afford independently. For smaller subcontractors, OCIP levels the playing field, allowing them to compete on larger projects without the burden of high insurance premiums.

Workers

Workers receive consistent workers’ compensation coverage regardless of which contractor employs them. They also benefit from enhanced safety programs and on-site risk management, reducing the likelihood of injuries in the first place.

Challenges and considerations when implementing OCIP

While OCIP offers substantial benefits, it’s not without challenges. Successful implementation requires careful planning and management.

• Upfront administrative complexity and enrollment processes: setting up an OCIP requires significant work at the project’s outset. The owner must enroll all contractors, collect payroll and project data, and ensure compliance with the program’s requirements. This can be time-consuming and requires dedicated personnel or a third-party administrator.
• Contractor buy-in and education: some contractors are hesitant to participate in OCIP, preferring to maintain their own insurance. They may worry about losing control over claims, impacting their experience modification rate, or dealing with unfamiliar processes. Clear communication and education are essential to gaining buy-in.
• Claims handling and EMR impacts: under OCIP, all claims are reported under the owner’s policy, which can affect the owner’s future insurance costs. However, most OCIP programs include experience rating adjustments that allocate claims back to the responsible contractors for EMR purposes. Ensuring this process is handled correctly is critical.
• Determining project size and suitability: OCIP is most cost-effective on large projects – typically $50 million or more – with long durations and multiple contractors. Smaller or shorter projects may not achieve sufficient savings to justify the program’s complexity and administrative costs.
• Selecting the right insurance partner and administrator: OCIP programs require specialized expertise. Working with an experienced insurance broker and a qualified third-party administrator ensures the program is structured correctly, enrollment runs smoothly, and claims are handled efficiently.

How to determine if OCIP is right for your project

OCIP isn’t a one-size-fits-all solution. Here’s how to evaluate whether it makes sense for your construction project:

• Project size and duration: OCIP is generally most beneficial for projects valued at $50 million or more and lasting 18 months or longer. However, projects in high-risk industries or locations may benefit at lower thresholds.
• Number of contractors and subcontractors involved: the more contractors on a project, the greater the administrative burden of managing individual policies – and the greater the savings from consolidating coverage under OCIP.
• Complexity and risk profile of the project: high-risk projects such as hospitals, bridges, tunnels, or high-rise buildings benefit from OCIP’s consistent coverage and enhanced safety programs. Projects with unique risks or exposure to catastrophic loss are ideal candidates.
• Owner’s risk tolerance and administrative capacity: owners must be prepared to manage the OCIP program or hire a third-party administrator. If the owner lacks the resources or appetite for this responsibility, traditional insurance may be a better fit.
• Availability of experienced insurance partners: successful OCIP implementation depends on working with brokers and insurers who specialize in wrap-up programs. Without this expertise, the program can become a burden rather than a benefit.

A state transportation agency planning a $300 million highway expansion evaluated their options and determined that OCIP would save $6 million in insurance costs, reduce administrative overhead by 50%, and improve safety outcomes. They partnered with an experienced insurance broker and third-party administrator, and the program exceeded expectations on all fronts.

Why Kavana Insurance is the right partner for OCIP

Implementing a successful OCIP program requires more than just purchasing a policy – it requires expertise, planning, and ongoing support. Kavana Insurance brings over 20 years of experience helping project owners, contractors, and developers navigate the complexities of wrap-up insurance on large construction projects.

Kavana’s team understands the unique challenges of OCIP, from initial program design and contractor enrollment to claims management and post-completion audits. They work with hundreds of insurance carriers, ensuring you receive competitive pricing and coverage tailored to your project’s specific needs.

Transparency and clear communication are at the core of Kavana’s approach. They take the time to explain how OCIP works, what it covers, and what to expect throughout the project lifecycle. There are no hidden fees, no confusing jargon – just straightforward guidance and support from start to finish.

Whether you’re planning a hospital, university campus, commercial development, or infrastructure project, Kavana Insurance has the expertise to make your OCIP program a success. You’re not just buying insurance – you’re partnering with a team committed to protecting your investment and ensuring your project runs smoothly from groundbreaking to completion.

Conclusion

Large construction projects demand careful coordination, risk management, and financial protection. OCIP wrap-up insurance simplifies these challenges by consolidating coverage under one comprehensive policy, reducing costs, eliminating coverage gaps, and improving safety outcomes for everyone involved.

For project owners managing multi-million-dollar developments, OCIP offers a proven path to cost savings, administrative efficiency, and peace of mind. The key to success is working with experienced insurance professionals who understand the complexities of wrap-up programs and can guide you through every step of the process.

Don’t leave your project’s success to chance. Get your OCIP insurance consultation with Kavana Insurance today and discover how wrap-up coverage can protect your investment and simplify your next large construction project.