National Roofing Legal Resource Center

Contract provision to be inserted in contracts when a roofing contractor is required to enroll in a consolidated insurance program (Wrap-Up)

Owners and general contractors sometimes want to consolidate the insurance coverages for a project into a consolidated insurance program instead of having the owner, general contractor and each subcontractor purchase their own policies to cover the risks of loss. This contract provision gives the roofing contractor the right to review the consolidated insurance program policy documents that might not be sent to the roofing contractor at the time the roofing contractor prepares its proposal or bid. The provision gives the roofing contractor the right to continue to use his or her own insurance or supplement the consolidated insurance program with its own insurance. The objective of this provision is to provide the roofing contractor with a contractual mechanism to avoid a situation where the roofing contractor may consider himself or herself underinsured because the owner-controlled insurance program or contractor-controlled insurance program provided coverage the roofing contractor considered inadequate.

Proposed Contract Provision: [Owner/General Contractor] has indicated this project is to be covered by [an owner-controlled insurance program ("OCIP") / a contractor-controlled insurance program "CCIP"]. Roofing contractor has been requested to enroll in the [OCIP/CCIP] and deduct the cost of insurance for the project from its proposal. Roofing contractor is unwilling to agree to enroll in the [OCIP/CCIP] and reduce its proposal to reflect insurance cost savings unless the [OCIP/CCIP] coverage is at least equal to the corresponding insurance presently maintained by contractor. Roofing contractor shall have the right to review the [OCIP/CCIP] policy, including having the right to have roofing contractor's insurance agent or broker evaluate the [OCIP/CCIP] policy compared to the corresponding contractor's policy. Roofing contractor shall have the right to determine if the [OCIP/CCIP] policy provides roofing contractor with equivalent insurance coverage.

If the [OCIP/CCIP] policy provides equivalent and adequate coverage in roofing contractor's reasonable opinion, roofing contractor will agree to enroll in the [OCIP/CCIP] and reduce the price of its proposal appropriately. If the [OCIP/CCIP] policy does not provide equivalent coverage in roofing contractor's reasonable opinion, roofing contractor has the right either to provide its own insurance and not enroll in the [OCIP/CCIP] or will provide its own insurance to supplement the [OCIP/CCIP] policy and the roofing contractor's price will be reduced to the extent of any savings realized by roofing contractor. If this project was bid based on the roofing contractor enrolling in the [OCIP/CCIP], and the roofing contractor did not include the costs of insurance in its proposal and the [OCIP/CCIP] does not provide equivalent coverage in roofing contractor's reasonable opinion, roofing contractor has the right to have its own insurance coverage or supplemental insurance as reasonably necessary for this project and add those costs to its price for the project.


5/29/2019



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