The key factors why an owner would typically choose the OCIP option are:

· The ability to protect anticipated revenue/Delay in Start-Up (DSU): Should there be a specified perils damage event, e.g., fire or escape of water leading to a delay to the project, the contractor would usually be granted an extension of time, therefore, no liquidated damages can be levied. This risk is insurable under an OCIP via DSU insurance, which is not available where the contractor provides the CAR insurance as they do not have an insurable interest in the employer’s anticipated revenue. Furthermore, lenders typically prefer the owner/employer to arrange DSU and control the insurances.

· Management of contractor insolvency: Should the main contractor become insolvent, any issues that may arise are greatly reduced where owners/employers have their own project insurance programme in place. Any claims proceeds would not get caught up in any insolvency proceedings. Furthermore, if due to insolvency or a disagreement occurs resulting in the contractor being replaced, an owner/employer-arranged programme would likely be achieved at no additional premium. If the contractor was responsible for arranging the programme, a new premium would be payable by the owner/employer which may include double the original cost due to re-procuring with the terms and conditions amended or even restricted. Ambiguity may arise around coverage for any pre-existing defects in the works done to date, as any new contractor may not agree to assume responsibility.

· Removing cost duplication: Ultimately, the owner/employer pays for the insurances under the construction contract and yet more than likely will not fully understand the insurance costs if the contractor procures the programme. This can allow contractors the opportunity to introduce additional costs to the bid for their time spent arranging and managing the insurances thereby increasing the cost to the overall project. By controlling procurement, the owner/employer understands the actual insurance cost and should request that tendering contractors discount their bid to reflect the insurance procured and provided by the owner/employer. Premium can be paid in instalments in line with budget requirements.

· Tailored policy wording: Policy wording is written to respond to key risks undertaken throughout the project through to handover.

· Control over insurer selection: The owner/employer controls which insurers to partner with, taking into consideration any existing relationships to leverage or that are more suited to the project’s risk profile.

· Reduced likelihood of disputes: Disputes between the project parties (and their individual insurers) will be less likely as all parties are covered under the OCIP policy and associated insurers, resulting in easier processing of claims.

· Protected handover: The owner/employer can control both the construction and operational phase placements during handover, ensuring that there is no protection gap and the covers dovetail.

It is important to note that without a contractor responsible for your development, you as the owner/employer will have a legal liability for the vacant site and must consider your public liability exposure. You should inform your insurance provider and ensure that the liability risk is adequately covered whilst you organise a new contractor. It is vital to act quickly as any delays, no matter how short, can exacerbate the disruption to a project and increase your own business costs and potential losses.