OCIP Language Creates Third-party Beneficiary

Posted by Albert Sica on Nov 9, 2011 9:16:53 AM

In a disturbing ruling by the Georgia Court of Appeals on October 5th 2011, the interpretation of language in an OCIP Program sponsored by the Atlanta Hartsfield Jackson International Airport was held to create a third-party beneficiary relationship for the estate of the injured worker. The contract stated the city's OCIP was "to provide one master insurance program that provides broad coverages with high limits that will benefit all participants involved in project".

The original breach of contract claim arose from an obligation the city's contractor had to enforce the downstream requirement of subcontractors (the trucking firm) to carry $10m - the trucking contractor who struck the fatally injured employee on the job-site was permitted on the jobsite with only $1M in limits. Had the contractor enforced the $10M requirement, the wrongful death judgment of $5.75M would have been sufficient.

Owner Controlled Insurance Programs are complex and need to be well thought out with qualified construction advisors and have the benefit of construction counsel. Often, an Owner implements such a program resulting from a sales type presentation and does not have an advisory team with the depth and skill to work through the details. The ALS Group together with construction counsel can provide guidance on the Feasibility and Execution of OCIPs' so the ultimate beneficiary is the Owner, not an unintended party.

Albert Sica, Managing Principal.

Topics: Construction, OCIP

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