On-Site vs. Off-Site Coverage in Construction

On-site insurance covers incidents at the jobsite, while off-site coverage extends to project-related incidents occurring at other locations.

construction worker signing insurance papers on desk

Published April 06, 2021   •   2 minute read

Construction is a high-risk, financially precarious industry that leans heavily on contractors, making certificate of insurance (COI) tracking especially important. However, depending on the project, third-party contractors may not be responsible for carrying their own policies. 

Owner-controlled insurance programs (OCIPs) and contractor-controlled insurance programs (CCIPs) are types of consolidated or controlled insurance programs (CIPs). Also known as wrap-ups, these comprehensive insurance plans typically extend to multiple parties and bundle several policies, such as general liability, workers’ compensation, and builder’s risk. They are commonly taken out on large-scale construction projects to cover all the contractors working on the job under one policy.  

OCIPS and CCIPs have several potential benefits. Perhaps most importantly, they’re powerful risk management tools. With careful consideration and the help of an expert insurance broker, you can ensure broad and uniform coverage across your exposures with project-appropriate limits. This type of policy also negates the need for your contractors to carry individual policies, enabling you to hire who you want, without regard for their insurance coverage and reducing the need for COI tracking. 

While OCIPs and CCIPs can be tremendously useful, however, they do have one major potential drawback: off-site coverage.

On-Site vs. Off-Site Coverage

Since the sponsor has less control over the safety procedures away from the worksite, tasks performed at other locations may be considered higher risk for insurance purposes. Therefore, most OCIPs and CCIPs offer exclusively on-site coverage. This means that the incident must occur at the designated construction site to be eligible for coverage. If you store or prepare materials off-site, your OCIP or CCIP is unlikely to cover a claim that occurs at this location, even if it directly relates to the project at hand. 

Example: A contractor producing custom mahogany woodwork in an off-site workshop leaves a faulty space heater on overnight. A fire breaks out, destroying thousands of dollars worth of completed work and raw materials. Since the incident occurred off-site, most OCIPs and CCIPs will not cover it.  

While the lack of off-site coverage can be a drawback of OCIPS and CCIPs, it doesn’t have to be a deal-breaker. Sponsors of projects with off-site components just need to be aware of these exposures so they can fill coverage gaps by either relying on the subcontractors’ insurance policies or discussing other options with an insurance broker. 

One potential solution is purchasing policies with off-site coverage independently of your OCIP or CCIP. However, this can be expensive, since you may need to purchase the individual components of an OCIP or CCIP, such as workers’ compensation and general liability, separately, if you want broader coverage. 

Depending on the nature of your operations and the comprehensiveness of your OCIP or CCIP, additional necessary policies may also include:

    • Auto
    • Pollution Liability
    • Professional Liability
    • Riggers Liability

The best way to determine the ideal coverage for your project is to consult with a qualified insurance broker. They can help assess your exposures and find the right course of action to manage potential risks. 

While large-scale construction projects frequently use OCIPs and CCIPs, third-party contractors may still need to hold their own insurance policies to fill gaps in off-site coverage. To mitigate risk, you must collect COIs and diligently maintain documentation. Unfortunately, this can be difficult and time-consuming. BCS’s convenient solutions simplify the process so you can manage your risk without sacrificing your valuable time and effort. Our full-service option couples our efficient software with support from expert analysts, while the self-service solution equips you with essential tracking software. Contact us to discuss the best options for your construction business. 

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