You may be seeing a rise in owners and contractors demanding the use of wrap-up insurance programs on projects. While wrap-ups may allow for some cost savings, you still need to maintain your base coverage and make sure completed operations coverage is in place.
What are Wrap-Ups?
Wrap-ups are blanket insurance programs that cover an entire project. They generally come in two forms: owner-controlled or contractor-controlled. Wrap-ups historically combine liability and workers compensation insurance, although recent litigation and some state’s statutes have limited the program to liability-only.
How does a Wrap-Up Impact your Bid?
If you are asked to participate in a project with a wrap-up program, you will be asked to submit a bid that excludes the cost of liability and workers compensation insurance. The owner or general contractor will provide these lines of insurance and charge each contractor a portion of the overall premium. In most situations, the premium for a wrap-up is less than the premium paid by individual contractors.
What are the Concerns with a Wrap-Up?
The greatest risk with a wrap-up is that the limits could be eroded if there are a lot of claims. Of course, the limits on a wrap-up should be set high enough to avoid this problem, but it is a concern. Another concern is whether completed operations coverage is in place. Wrap-ups typically terminate once the project is completed, so contractors are well advised to visit with their own insurers to make sure that they have some coverage in place on top of the wrap-up.
Wrap-ups can be a great convenience and cost savings on a project. But, make sure you know the extent of the wrap-up coverage and have in place additional coverage to protect against claims above the wrap-up policy limits and after the project is completed.