Introduction

The Problem

More and more contractors are being required to work under owner controlled insurance programs (OCIPs). At one time, these programs were limited to large single-site projects. As time goes by, they are appearing on smaller single-site projects and in the form of rolling OCIPs that cover multiple projects. Though they lack experience with these programs, average AGC members are now finding it necessary to identify and deal with the many complex issues that these programs raise.

The Solution

Very early in the project delivery process, contractors and their legal and insurance advisors need to start asking questions about any OCIPs they encounter. Contractors have every right and reason to know exactly how any such program will work, including the details of the safety and other loss control programs that will be one of the keys to its success—or failure. Contractors are and should be wary of owners that are slow to provide the details of their programs, and skeptical of any OCIP brokers who fail to make themselves available. If the owner intends to use an OCIP, then the owner and its broker should work out all of the details well before the owner solicits any bids or proposals to perform the work. In addition, if the owner and its broker are well-organized, the interested contractors should find few gaps or discrepancies between the OCIP and the contract documents.

By asking the right questions at the right time, contractors can discourage owners and their brokers from putting off important decisions. Contractors can also help everyone avoid confusion. On the following pages, the reader will find a relatively simple and straightforward outline of the major issues that contractors need to raise and the major points that contractors need to negotiate.

The Process

The Risk Management Committee of the Associated General Contractors of America (AGC) appointed an OCIP Task Force and assigned it the following mission: to identify the issues that contractors should consider before seeking or performing work under OCIPs, and to suggest negotiating points for contractors to explore. In addition, the OCIP Task Force sought to identify issues which require contract language to address. The chairman of this hardworking group was Bill McIntyre and the other members were Paul Becker, Jim Boone, Tom Quinn, Steve Warnick, Mike O'Neill, and Ann Rudd Hickman.