Different construction insurance mechanisms currently utilized by the Essay

Different pull insurance mechanisms currently utilized by the construction industry - Essay ExampleMaterial loss whitethorn result from the death of an employee, workers compensation or defects on construction. Construction insurance although in opening is not very different from any other type of insurance, the main difference lies in the enormous risk a construction company is opened to while undergoing the project, thus, resulting to a higher premium.As a matter of fact, the market for general liability insurance has taken a disastrous turn oer the past two years. Builders and remodelers in every part of the country atomic number 18 experiencing dramatic increases in premiums and big changes in deductibles and exclusions. In some states, coverage may not be available at any price. If a companys insurance is too costly, it cant be competitive. (Miller)This is the reason why several mechanisms are used in the construction industry to minimize the risk or the amount of premiums t o be paid. Some mechanisms are provided for by law whereas some evolved from general practice.Several examples of these mechanisms are the Additional-insured minutes, Owner Insured Risk Programs, reinsurance and the inclusion of a mediation and/or arbitration clause in the insurance contract.One of the mechanisms used, particularly in Oregon, is the additional-insured endorsements. These endorsements, which ... An additional-insured endorsement states that in addition to the insured contractor, another party is an additional insured party under the insurance contract, thus giving the additional party the mightily to make a claim directly on the policy. (Christensen) This simple mechanism ensures that the insurance is available among the various participants in construction projects including owners, general contractors, subcontractors, and sub-subcontractors. This mechanism in effect lowers the overall cost for risk-allocation on the project.Another mechanism is the Owner Controll ed Insurance Program or OCIP. In an OCIP, the owner purchases insurance for other participants in a construction project. (Thelen Reid Brown Raysman & Steiner LLP) An Owner Controlled Insurance Program will cover the owner, the contractor , the subcontractors and sometimes include the design professionals. The coverage is tailored to the of necessity of the party applying for it but generally it includes general liability (CGL), builders risk, workers compensation, design errors and omissions as well as excess and other special coverages. The OCIP process is pretty complicated, contractors and subcontractors adopt to be cautious when participating in an OCIP project. They must ensure that the coverage offered by the OCIP is sufficient to replace their existing insurance coverage. They also must be careful that the bid deduct process by which the cost of insurance deducted from their price is properly and timely performed. (Thelen Reid Brown Raysman & Steiner LLP)The OCIP was genera lly used in capacious scale constructions, however, it is slowly becoming popular even with small-scale projects especially in condominium and