Wrap-Up Insurance: Saving You Time & Money on Large Construction Projects
By: Darren O’Connell – Contractor/Construction Insurance Broker Specialist
Rhodes & Williams Insurance Brokers
Large construction projects present many difficulties because of increasing costs, lack of control, and rising litigation. Ensuring all of these issues are addressed while obtaining proper insurance coverage can be intimidating at best. In addition to all of the exposures you personally face as an owner or general contractor, you also have to deal with potentially different forms of insurance coverage for all of your subcontractors. That means having to review their insurance for terms, conditions and exclusions to ensure they are providing adequate limits and coverage or face a potential uninsured loss.
Given this overwhelming scenario, it’s no wonder that wrap-up insurance programs have steadily increased in popularity. With a wrap-up program, the owner or general contractor supplies a single insurance program for all parties involved in the project for duration of the project term. When the owner purchases the wrap-up protection, the program is often referred to as an Owner-Controlled Insurance Program (OCIP). If the general contractor purchases the wrap-up insurance, it is known as a Contractor-Controlled Insurance Program (CCIP). However, keep in mind that regardless of what name it is referred to, the coverage is still underwritten by an insurance carrier.
There are some significant benefits to using this type of insurance.
- The assurance that all parties to the project have adequate insurance, instead of reliance on a multitude of certificates of insurance that do not guarantee proper insurance coverage (and not having to review every contractors policy to ensure they have adequate coverage);
- Avoids coverage gaps in insurance policies. Gaps in coverage between policies are hard if not impossible to bridge;
- Avoids paying the contingency and profit loading applied by subcontractors to their actual insurance costs;
- Eliminates or substantially reduces duplication of insurance premium costs with contractors and each of their subcontractors;
- A single, coordinated loss control and insurance claims handling program makes for a safer job site, which also results in a project completed on time and under budget;
- Broader insurance coverage that meets prescribed standards and provides uniform insurance protection; higher limits can be purchased due to a larger volume of insurance;
- Extended completed operations coverage on the entire project;
- As the purchaser you are the “named insured and have the authority to select your insurer, the types and limits of coverage”;
- Assists smaller contractors that do not have to factor insurance costs into their bid.
Wrap-up insurance programs can be a cost-effective way to get the proper insurance against the risks and exposures that are inherent to your particular project. It also provides a tool for quality control by giving you the ability to coordinate the performance standards for all the subcontractors who will work for you.
Contact a Rhodes & Williams insurance broker now for more information about wrap-up insurance programs.