The recent spate of construction site accidents in New York City in the past several months couldn’t have come at a worse time.

So you may have received a Certificate of Insurance (COI) from your vendor, and you feel comfortable that its employees now can be allowed on your building’s property. To you this may seem like they have given you a familiar card from Monopoly. With your supposed “get out of jail free” card, you allow vendors access to your building and allow contractors to perform work on your property. However, you may not be as “free” as you think.

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".

Controlled Insurance Programs (CIP) are becoming more and more common today but a contractor must be very careful to examine the terms and conditions of the CIP carefully as this may be their sole source of coverage. One of the most misunderstood issues is what happens when a CIP is cancelled. Virtually every CIP program has a section in the “manual” that allows for the program to be cancelled with some notice (hopefully) to the contractor. In many cases it could be a short as 30 days. What happens to the bid-deducts? Can you now submit a change order to increase your cost to Include insurance? Does the work you did prior still get coverage under the CIP? What about completed operations? To complicate matters many contractors have a “absolute wrap-up exclusion form [ISO CG 2154]. Pay close attention to the third condition in the second column that states “this exclusion applies whether or not the consolidated (wrap-up) insurance program: (3) Remains in effect” – So, when the CIP is cancelled the contractor can find themselves without ANY coverage unless they can scramble to get an exception to the exclusion.

I advise many of our clients on their personal risk management and insurance issues. An often overlooked area is a family’s Personal Umbrella coverage and limit.