Wrap-Up Insurance

Written by Maggie Tiede

Maggie Tiede is a writer and blogger based in Saint Paul, Minnesota. Maggie has worked as a freelance writer since 2013, when she began reporting on politics, local events, health, and human interest for the Grand Rapids Herald-Review.

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Constructing a multi-million dollar project can be stressful. Owners, developers, and contractors must coordinate to make sure that the building process runs according to budget limitations and finishes on time.

Wrap-up insurance (sometimes referred to as wrap insurance) is a blanket policy that provides risk protections for owners, contractors and subcontractors for projects that exceed $10 million dollars.

A wrap-up insurance policy gives you peace of mind knowing all participants in the project have sufficient insurance to meet any and every potential risk or liability.

An independent insurance agent in our network can help you compare multiple wrap insurance companies and policies. Find a local agent who can provide you wrap insurance quotes.

Benefits of Wrap Insurance Over Conventional Policies

• There is no need to assign responsibility for third-party liability or property damage, as all insured parties are on the same policy.
• This insurance can give you more control over the risk coverages you carry on a project.
• Subcontractors are provided coverage for multi-family construction projects, which are typically excluded on individual subcontractor policies.
• This coverage can expedite the claim handling process, which leads to lower potential legal claims costs for owners, contractors and subcontractors.
• When you buy a wrap insurance policy instead of individual policies, you can save as much as 30% on your premium expenses.

What Is Wrap-Up Insurance?

When you are the owner or general contractor on a large construction project, you have a lot to think about. Completing the project on time and on budget, keeping your workers safe and making sure all subcontractors are doing quality work are only a few of your concerns.

The last thing you want to worry about is whether or not your contractors and subcontractors are carrying the right kind of insurance.

A wrap insurance policy can help give you peace of mind knowing everyone involved in your project is insured properly. A wrap or wrap-up insurance policy is a sweeping blanket coverage that protects the owner, the contractors and subcontractors.

There are two types of coverage:

• Owner-controlled insurance program (OCIP): The OCIP is set up by the owner of the project for the benefit of the builder or contractor to cover all listed contractors.
• Contractor-controlled insurance program (CCIP): The general contractor may use a CCIP to extend coverage to all the contractors and subcontractors signed up on the project.

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Basic Wrap-Up Insurance Coverage

Your wrap insurance coverage will combine a number of risk protections for you, your project and your workers. The specific coverage on your unique policy will depend upon the insurance company you work with and may include:

• General liabilitywith a broad form endorsement: This covers all liability risks for the project, including bodily injury coverage to protect against third-party injuries that occur on the premises or as a result of the owner, contractor or subcontractors work-related activities. Also, it protects third-party property from costs due to damage caused by anyone covered on the policy.
• Umbrella liability: Umbrella insurance provides excess liability coverage above and beyond your general liability policy coverage limit. For example, a general liability policy may cover up to $1 million in damages while an umbrella liability policy would cover up to $10 million or more. If you had a $5 million dollar claim, the general policy would cover first $1 million and the umbrella policy would cover the remaining $4 million.
• Builders risk: This portion of your policy covers the building under construction against damage from causes such as fire and severe weather.
• Workers compensation: This state-regulated and mandated insurance covers employees who are injured, made sick or die as a result of job-related activities. The wrap policy provides worker compensation insurance coverage to all enrolled contractors or subcontractors on the project.
• Commercial vehicle: Your autos, trucks, vans or specialty vehicles used on the construction project can be covered with a commercial vehicle insurance policy in the event of property damage or liability claims.
• Property damage: This is coverage for damage to the property of all the parties named on your policy. You can also add equipment floaters for specialized equipment and tools or inland marine insurance for equipment and tools transported to and from a job site.

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Add-on Coverage for Your Wrap-Up Insurance

Some construction projects require risk protections that extend beyond the basics of a wrap insurance policy. If this is the case, most insurance companies offer additional coverages to handle these specialized risks. Some examples are:

• Pollution liability: Covers construction projects against pollution risks: includes gas or fuel that leaks from pipelines or on-site tanks, contamination of soil by toxic substances and other pollution risks
• Contractors professional liability: Safeguards contractors against liability for design errors or omissions; can cover a single project or all of the contractors' work
• Railroad protective liability: Provides liability coverage for contractors who do construction work near any properties owned by railroads; mandatory for any work carried out within 50 feet of railroad-owned property that could be damaged, such as railroad trestles, bridges, crossings, roadbeds, underpasses, tracts or tunnels
• Builder's risk(course of construction): Protects buildings and structures in the process of construction
• Contractors equipment floaterorinland marine: Extends property protection beyond structures to include equipment such as trailers, cranes, bulldozers, graders, forklifts, mobile tools and more
• Installation floater: Stretches construction project risk protections to value of labor and materials as construction work is in progress

The Dollars and Cents of Wrap Insurance

Since construction wrap insurance is such an all-encompassing coverage, it can be fairly expensive to purchase. The cost of your policy will be dependent on the size of the policy you buy, the add-ons you choose and the insurer you work with.

There are a number of things you can do to control your costs. One way to keep your wrap rates down is to increase your deductibles, making sure that you choose a deductible amount that you can pay out of pocket in the event of a claim against your insurance.

Another way general contractors, building owners and developers often manage these expenses is to spread the cost of the premium to all the contractors and subcontractors protected under the policy.

Be sure to carefully communicate the terms of each contract. A local independent agent in our network who specializes in commercial insurance can be an excellent resource when you are looking for affordable coverage and answers to your questions.

Find a Customized Wrap-Up Insurance Policy

When it comes to multi-million dollar construction projects, you have an abundance of workers and risks to cover. If you have a wrap up insurance policy, you can focus on the quality of your work and be confident that you and all your contractors and subcontractors are protected in the event of unexpected mishaps and liabilities.

Contact an independent insurance agent today and find a wrap-up insurance policy customized to your specific needs and budget.