Wrap-Up Insurance
Wrap-up insurance is a project-specific liability program that consolidates coverage for an entire construction project under a single policy. It protects the owner, general contractor, contractors, and subcontractors from specified liability, workers’ compensation, property and equipment loss, and other project-related risks for the duration of the build.
Key points
- Consolidates insurance for all contractors and subcontractors on a project.
- Common on large, high-value projects to avoid coverage gaps and inconsistent limits.
- Two main forms: owner-controlled (OCIP) and contractor-controlled (CCIP).
- Policies vary in scope and often include explicit exclusions; coverage typically transitions to individual policies after project completion.
How it works
A single sponsor—either the project owner (OCIP) or the principal contractor (CCIP)—purchases and manages the insurance program. Contractors and subcontractors enrolled in the program are covered while working on the project, reducing the need for each firm to maintain separate, overlapping policies. Costs are usually allocated among stakeholders or built into project pricing.
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Common types of coverage included
Policies differ by program but frequently include:
* General liability (often with a broad-form endorsement) — covers third-party bodily injury and property damage arising from project operations.
* Workers’ compensation — covers workplace injuries for enrolled workers.
* Builders’ risk — covers property damage to structures under construction from events like fire, wind, or water.
* Umbrella/excess liability — provides additional limits above the primary liability policy.
* Commercial auto — liability and physical damage for vehicles used on the project.
* Property and equipment coverage — including equipment floaters or inland marine for tools and mobile equipment.
Note: Specific coverages and limits vary; many wrap-up policies include exclusions (for example, certain professional errors, design flaws, pollution, or specified perils) that may require separate or additional policies.
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How to secure wrap-up coverage
- Evaluate project suitability — size, cost, schedule, complexity, and risk profile determine whether a wrap-up is appropriate.
- Hold pre-bid meetings — align contractors, subcontractors, and insurers on expectations, enrollment, and reporting procedures.
- Select an insurer or underwriter — consider financial stability, experience with wrap-ups, scope of coverage, and cost.
- Negotiate terms — agree on covered lines, limits, deductibles, exclusions, endorsements, policy period, and claims handling processes.
- Enroll contractors/subcontractors and implement compliance and claims-reporting procedures.
- Plan for transition — toward project completion, arrange for individual operational coverage or tail coverage as needed.
Limitations and challenges
- Complexity and coordination: programs require significant planning and stakeholder cooperation.
- Cost: premiums, deductibles, administrative fees, and program management can be substantial, especially for long or high-risk projects.
- Coverage gaps: some risks may be excluded or only partially covered (e.g., certain professional liabilities, pollution, or design defects).
- Market availability: wrap-ups may be expensive or hard to place depending on location, project risk, and insurer appetite.
- Administrative burden: ongoing oversight, enrollment, and claims administration are required throughout the project.
OCIP vs. CCIP
The primary difference is who purchases and controls the policy:
* OCIP (Owner-Controlled Insurance Program) — the project owner buys and manages the insurance for the project.
* CCIP (Contractor-Controlled Insurance Program) — the general contractor purchases and administers the coverage.
Both approaches centralize risk management, but control, contractual relationships, cost allocation, and program administration differ.
What is a wrap-up exclusion?
A wrap-up exclusion is a specific risk or circumstance that is expressly not covered by the wrap-up policy. Common exclusions can include certain professional liabilities, intentional acts, pre-existing conditions, design errors by architect/engineer unless endorsed, or pollution events. Exclusions must be reviewed carefully so stakeholders can secure additional coverage where needed.
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Bottom line
Wrap-up insurance can simplify risk management and reduce gaps or duplicate coverage on large construction projects by placing most project exposures under a single program. However, it requires careful planning, clear enrollment and claims procedures, and attention to exclusions and costs. Assess project size, complexity, and stakeholder readiness before opting for a wrap-up program, and plan for coverage transitions after project completion.