Consolidated Insurance Programs

February 5, 2017

Many contractors working under a consolidated insurance program (“CIP”) are never provided with information to allow them to determine what insurance coverage they will have on a CIP project.  Many times, construction projects are completed and contractors and subcontractors never have copies of the CIP policy or know what coverage is actually provided.  As a result of these concerns, the Texas Legislature recently amended the Texas Insurance Code to address the issue.

 

Chapter 151 of the Texas Insurance Code has been amended to require certain information to be provided in connection with CIPs.  A party who is required by a contract to enroll in a consolidated insurance program (typically an OCIP or CCIP) must be furnished specific information concerning the program as required by the statute no later than ten days prior to the date the person is required to enter into the contract.  If a party does not receive the information required by the statute within ten days before entering into the contract, the party may choose to not enroll and participate in the CIP.  If a party chooses not enroll in the CIP, the party may be required to obtain insurance coverage that is substantially similar to other parties working on the project but who are not insured under the CIP.  A party that elects to not participate in the CIP will be entitled to be reimbursed for the actual cost of their insurance coverage.

 

Additionally, contractors and subcontractors, upon written request, must be furnished a complete copy of the insurance policy that provides coverage under the CIP.  Failure to provide a copy of the insurance policy within the time periods set forth in the statue constitutes a material breach of contract.

 

Take Away: Contractors are entitled to receive insurance information regarding the CIP. A request for this information should be made as soon as possible. 

 

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