Wrap Up Insurance Explained
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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.
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.
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 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:
- 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.
- 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.
If you are interested in insuring your next construction project with a wrap up insurance program or exploring a blanket wrap up liability insurance program, contact ALIGNED Insurance Inc. today and we will take the time to walk you through your coverage options Or Connect With Us Today At www.alignedinsurance.com
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