What is Wrap-Up Insurance
Wrap-up insurance is a liability policy that serves as all-encompassing insurance that protects all contractors and subcontractors working on large projects costing over $10 million. The two types of wrap-up insurance are owner-controlled and contractor-controlled. Owner-controlled insurance is set up by the owner of a project for the benefit of the builder or contractor to cover all listed contractors. The general contractor, meanwhile, may use a contractor-controlled insurance program to extend coverage to all the contractors and subcontractors signed up on the project.
BREAKING DOWN Wrap-Up Insurance
The intent of a wrap-up insurance policy is to provide peace of mind that everyone involved in a project is insured properly. Wrap-up insurance is sweeping blanket coverage that protects the owner, contractors and subcontractors.
For example, consider an owner-controlled insurance program purchased by the owner on behalf of the builder or contractor. Counting add-ons, the insurance includes workers compensation, general liability, excess liability, pollution liability, professional liability, builder's risk and railroad protective liability. While the cost of wrap-up insurance can be expensive, the cost can be divided among general contractors and sub-contractors.
Basic Wrap Insurance Coverage
Wrap insurance covers a number of risks for you, your project and your workers. Policies can vary, but may include:
- General liability with a broad form endorsement: This covers all liabilities for a project, including bodily injury coverage against third-party injuries that occur on the premises or as a result of owner, contractor or subcontractor work-related activities. Also, it protects third-party property against damage caused by anyone on the policy.
- Builders risk: This type of policy covers the building under construction against damage from causes such as fire and severe weather.
- Umbrella liability: Umbrella insurance provides coverage 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.
- Workers' compensation: This wrap policy provides workers' compensation insurance coverage to all enrolled contractors or subcontractors on the project.
- Commercial vehicle: This insurance covers cars, trucks, vans or specialty vehicles used on the construction project against property damage and liability claims.
- Property damage: This covers property damage 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.