Difference Between Builders Risk And Wrap Up Liability Insurance

What is liability insurance?

When you hear contractors and other professionals talk about “liability insurance”, they’re likely referring to policies that are designed to provide coverage against allegations of negligence.

As we’ve mentioned previously in our discussion on commercial general liability insurance, there are three parts to a negligence claim:

  • There needs to be a duty of care
  • The duty of care must be breached
  • The injured party must suffer damages 

Businesses and individuals often rely on this type of insurance during slip and fall accidents, but it’s also useful to have when you’re planning a construction project. After all, you never know when someone might wander onto your construction site and sustain a serious injury in the process.

What does wrap up insurance cost?

What's The Difference Between Builders Risk And Wrap Up Liability Insurance?
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There are at least two reasons why wrap up insurance is sometimes considered a cost-effective option for construction professionals:

  1. You’re able to divide coverage up among multiple parties
  2. You can save on administrative costs when you’re dealing with a centralized insurance policy 

Although wrap up insurance can help you lower the cost of insuring your construction project, details like the scope of the build, the number of contractors involved, and the timelines for construction can all affect the cost of your premium. With the help of an ALIGNED broker, however, crafting an insurance product that makes sense for your project can be done in less time than you think.

What’s not covered?

When answering this question, it’s important to remember that wrap up insurance is primarily concerned with liability issues that occur while the construction project is underway. 

If issues arise after operations are completed, you may not be able to rely on your wrap up insurance policy for coverage. In addition, although tools may be expensive to replace after a bad hailstorm, standard property damage claims generally aren’t covered under this type of policy either.

What is builder’s risk coverage?

If wrap up insurance deals with the liability risks that can come up during construction, builder’s risk coverage primarily concerns itself with property damage.

When you’re working on a construction project, you’re often depending on different tools and equipment pieces to get the job done. However, between neighbourhood vandals, fire hazards, and other insured perils, property damage is a genuine risk when you’re working at a job site.

For these reasons and more, many contractors and owners choose to take out both wrap up insurance and builder’s risk coverage.

So…What’s The Difference Between Builders Risk And Wrap Up Liability Insurance?

Understanding the differences between insurance products can be confusing especially when insurance jargon or acronyms are being used.  One question the experienced insurance brokers at ALIGNED Insurance are asked regularly is what’s the difference between builders risk and wrap up liability insurance? The answer to the question “what’s the difference between builders risk and wrap up liability insurance?” is…lots…as they are entirely separate insurance products that cover two completely separate things.  However, both products do share some similarities in that they are products used specifically to cover risks during construction projects.

One insurance policy can’t cover all things so insurance companies build insurance products to address specific risks to ensure there isn’t overlap, there clarity on what is covered and that appropriate information is gathered to determine the pricing and coverage offered for each insurance product.  For example a commercial property policy protects an organization from damage or destruction to their assets ex. buildings, equipment, inventory etc  vs. a commercial general liability insurance policy which effectively covers potential bodily injury and property damage to third parties that a business could cause as a result of their operations.

Highlighting the differences between commercial property insurance and commercial general liability was done intentionally because the difference between builders risk insurance and wrap up liability insurance is the same. Builders risk insurance is just property insurance while a building or unit is under construction and wrap up liability insurance is general liability insurance while a building or unit is under construction.

Common covered claims under a builders risk policy would be water damage, fire damage, theft of building materials etc. during the construction period. In contrast wrap up liability coverage responds to claims arising from people coming on to a construction site and breaking an arm, leg etc and covers a number of other potential liabilities too.

Contact ALIGNED to discuss your insurance options or request your FREE insurance quote today. Our brokers are committed to helping you get the coverage you need at the best rates possible.

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