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Insurance for Construction Projects.

A developer controlled construction project can be insured through an umbrella policy which is often called an owner controlled insurance programme (OCIP).

It is designed to accommodate the insurance needs of a wide range of construction projects, ranging from residential blocks to imposing civil engineering contracts.

The developer-employer or a lead contractor can both purchase this cover and it can include the following cover:

• Contractors "All Risks" or Erection "All Risks"
• Delay in start-up cover including advanced loss of revenue, loss of profit, loss of rent &/or increased debt servicing costs
• Third party liability including non negligence (JCT 6.5.1 / 21.2.1)
• Existing structures
• Costs of emergency or preventative action

Benefits of buying a ring-fenced construction project insurance policy compared with outsourcing insurance to a lead contractor's Contractors Combined policy are:

• Claims are managed by the developer meaning that they get settled quicker getting the project back on track quicker. Any disputes regarding liability and subrogation are dealt with as a separate process by the insurer.
• The quality of the cover is determined by the developer rather than the contractor and therefore can be broadened to suit their appetite for risk.
• If the contractor becomes insolvent it may compromise the cover in place if arranged by the contractor. The approach describes here negates that risk.
• Cost control is improved as the developer has direct oversight and purchasing control with respect to the insurance programme. the developer can also seek reduced fees from the contractor to account for the fact they are no longer bearing the cost of transferring the risk.
• An efficient and ring-fenced policy means that time is saved and programme simplified.