Under the traditional multi-policy model for residential construction, the limits of each individual policy could be used to satisfy a large claim. Theoretically, 30 policies with a $1 million limit of liability each could produce $30 million of coverage to fund a loss.

In the new insurance model for residential construction under an OCIP, there is only one commercial liability insurance policy to protect the developer, general contractor, subcontractors and sub-subcontractors, and the coverage is restricted to the designated project or projects. A mediator no longer has the ability to tap the multiple individual policies of the contractors who worked on the project to build a fund to resolve the dispute in a construction defect case before the parties have to resort to protracted and expensive litigation.

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