Thursday 04 July 2013

Owner Controlled Construction Insurance

owner controlled construction insurance (OCCI), the benefits:

With the outcomes of the Christchurch earthquakes now clearly impacting the availability and costs of insurance there are some clear advantages for owners to take control of this aspect of construction and alteration projects. Owners should seek out professional advice but the following are aspects to be considered carefully

Total Assessment of Project Risk

A contractor arranged insurance programme will generally focus on the ‘traditional’ insurance aspects of the project i.e. material damage to the works, liability to third parties etc.  For the Owner, the exposures may include Loss of Future Revenue due to delays, Force Majeure and Professional Liabilities.  Many of the exposures cannot be addressed adequately (or transferred to Insurers economically) if the ‘traditional’ insurances are covered under contractor controlled policies.

Control of Policy Coverage

The Owner considers and negotiates the extent of Policy Coverage and Deductible Levels and is given the opportunity to consider insurance of some Excepted Risks.

Control of Premium Expense

Insurances arranged by Contractors will be loaded by profit margins and on-site costs. The Owner controlled method avoids this additional margin.

Control of Claims

Claims are controlled and disputes addressed by the Owner rather than the Contractor.  Claim payments are made to the Owner which ensures funds are correctly allocated to the project.

Cessation of Work does not Cause Immediate Cancellation of Cover

Some policies discontinue cover as soon as cessation of work has taken place, the better policies give a 60 days grace period.

Contractor Default will not Jeopardise Insurance

The Insurance Programme is designed to reflect the interests of the Owner, and default by the Contractor or Sub-Contractors will not prejudice the rights of the Owner.

One Policy Wording Covers Entire Project

If several contractors are involved, the project may be insured under various policy wordings with different sums insured and deductibles.  For any substantial loss, a number of insurers could become involved, each with differing interpretation and cover and settlement of the loss. 

Managed Integration with Operational Insurance Programme

Proper dovetailing of the Insurance Programmes can be planned to avoid uninsured gaps between handover of various stages of the works.

Security of Insurers

Your broker will not guarantee Insurers, but should monitor them daily to keep track of their ability to pay claims.

Arranging an Owner Controlled Programme should also Address

§         The requirements of investors

§         Off-site storage of works materials

§         Transit of materials to the contract site

§         Advance loss of profits, including critical items in transit

§         Contingent Commissions

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Friday 09 July 2010

What do you think should be included in a retirement village disclosure statement?

As you know the government has been trying to agree with the providers of retirement housing on an appropriate form of prospectus for Retirement Villages. You can see the results of its preliminary research at: 
http://www.dbh.govt.nz/retirement-villages-summary-of-submissions

Still a long way to go to get to something everyone agrees is sufficiently simple and informative.

  

 

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honeypot@spinningplanet.co.nz