Summary Challenges and Benefits for Real Estate Developers

This article is part of a series sponsored by TSIB.

Real estate development is a business process that focuses on the complete development and renovation of properties, whether they are existing properties or brand new properties. When it comes to real estate development, it is important to have appropriate wrap-up insurance in place before the project begins. Finding the right insurance plan is important to the overall success of your project efficiency.

There are 2 main types Summarize:

• OCIP (Owner Control Insurance Plan)
• CCIP (Contractor Controlled Insurance Plan)

Both summary types have their own challenges and benefits:

OCIP Challenge

OCIP is composed of owners responsible for the program. In an OCIP, the owner is required to provide collateral requirements, which sometimes may include 100% upfront of any premiums and expected losses, letters of credit, or cash collateral.In this case, the owner must also hire a packaging manager to reduce the paperwork burden involved. Even after the project is completed, the owner must participate in the claims management process, which can take a total of 5 to 10 years, so any savings and losses cannot be determined until all claims are completed.

CCIP Challenge

In a CCIP, the general contractor (GC) assumes full responsibility for the project. This means that all project risk falls directly on the GC. The GC handles subcontractor registration, assists with all administrative paperwork, and manages project claims. Hire a packaging manager Can help limit some of the administrative pressure placed on the GC. In CCIP’s claims management process, the owner can close the project when it is completed because the GC is responsible for this activity.

Benefits of OCIP

In OCIP, owners become providers of many of the program’s benefits, including:

• Claims Control
• Coverage
• Enhanced and even coverage
• Reduce litigation
• Cost Control
• Improve security

Benefits of CCIP

In the CCIP, the GC will gather many program benefits, including:

• Premiums include all costs – variable and fixed
• A strong return-to-work plan
• Consistent risk transfer across all documents
• Guaranteed Fee – No Deductible
• Develop a crisis management protocol

As a real estate developer, the main goal when choosing OCIP or CCIP is to provide you with the overall assurance that your project is well protected. If you have more questions about the challenges and benefits real estate developers face between CCIP and CCIP, Okop, Contact TSIB now!