Wrap Up Insurance Explained

Wrap Up Insurance Explained

Typically, risk is then pushed downstream—from owners to general contractors, and from general contractors to subcontractors—through contractual indemnifications, contractually mandated minimum insurance requirements and additional insured provisions. Wrap up insurance is an effective way of insuring all of the liability risks associated with construction projects are appropriately addressed as identifying and managing them can be a confusing and daunting task for the parties involved. The traditional insurance approach requires each party to procure and maintain separate coverage. Generally, the contractor and subcontractor then include the cost of insurance, plus a mark-up, in their project bids.

While this approach may be customary for the parties involved, it is not without complications. Due to the number of policies and insurers involved, the traditional approach creates the potential for unforeseen liability issues/gaps to emerge.  Some parties may have aggregate issues, inadequate limits, gaps in coverage or no insurance at all. Furthermore, because there are various insurance companies covering one project, each claim has the potential to cause costly and time-consuming cross litigation.

As an alternative to having each party obtain separate liability policies, project owners and general contractors can turn to a wrap up insurance programs to manage their risks.

What is Wrap up Insurance?

wrap up insurance
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Wrap up insurance programs are centralized insurance and loss control programs that can protect the project owner, general contractor and/or subcontractors under a single insurance policy or set of policies for the construction project.

Insurers typically offer two types of wrap up insurance programs based on the party paying for and/or coordinating the program:

  1. Owner Controlled Insurance Program (OCIP): Under an OCIP, the project owner sponsors and controls the program. Accordingly, the project owner is the first named insured, and the general contractor, subcontractors and other participants are named insureds.
  2. Contractor Controlled Insurance Program (CCIP): Under a CCIP, the general contractor sponsors and controls the program. The general contractor is the first named insured, and the subcontractors and other participants are named insureds. Depending on the program, the project owner is either an additional insured or named insured.

While wrap up insurance programs are most frequently used for large, single-site projects, a blanket or rolling wrap-up can be used to insure multiple projects under one program.

What does wrap up insurance cost?

A solid wrap up insurance policy can help you save time and/or money in multiple ways:

  • It centralizes your insurance so that you don’t have to waste valuable time dealing with multiple insurance providers
  • Due to the sheer number of parties being insured, you may be able to get a discount on wrap up insurance policies 
  • You don’t have to worry about insurance gaps or inadequately insured workers in the event of a lawsuit

But while wrap up insurance has a lot to recommend it as a simple, one-step solution for construction professionals, figuring out the cost of a policy can be difficult. 

Your ALIGNED broker will be able to assess the details of your project, evaluate the application, and then give you an estimated cost.  Contact us or request your FREE wrap-up insurance quote today! 

What does wrap up insurance cover?

In general terms, wrap up insurance deals with the liability risks associated with working on construction projects. But more than the circumstances it covers, this coverage type is also notable for the fact that it allows multiple parties to be insured under the same policy. 

This is important for a couple of reasons:

  • First, because it’s not unusual for multiple companies, crews, and contractors to be involved with the construction of a new building. 
  • And second, because it’s not unusual for individuals to have liability insurance

If a third party were to wander onto the site, suffer an injury, and sue, wrap up insurance makes it possible to avoid situations where there are litigation issues and liability concerns caused by coverage gaps and workers with inadequate insurance. 

What is wrap up insurance for?

The short answer is that wrap-up insurance is an easier way to manage liability insurance during an ongoing construction project. 

Between the heavy-duty industrial equipment, machinery operators, construction crews, and building materials, many construction worksites are full of potential safety hazards. If a third party were to break an arm or a leg while on your site, there could be multiple companies and contractors all listed on the statement of claim.

Wrap up insurance makes it easier for the owner or the contractor to ensure that the project is adequately insured. 

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Is wrap up insurance on your radar ahead of your upcoming construction projects? If so, you’ve come to the right place! Here at ALIGNED, our brokers are committed to helping you find the insurance options that give your contracting business and your building project the best coverage available.

Your ALIGNED broker will carefully evaluate your situation before recommending an insurance package that’s been crafted with the needs of your crew and yourself in mind. 

Get a FREE wrap up insurance quote today!

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