With skyrocketing costs and increasing litigation, project owners and contractors are constantly looking for ways to cut costs and gain more control over their insurance coverage and limits. An old option that’s gaining new popularity is wrap-up insurance, also known as a consolidated insurance program.
What is wrap-up insurance?
In short, it’s the majority of insurance coverage for a large construction project wrapped up into a single policy through a single company. The wrap-up policy covers all parties including the owner, general contractor, subcontractors, and other parties involved in the project. These policies can be either owner controlled (OCIP) or contractor controlled (CCIP), but in either case, it allows the owner to spread the risk among various parties and provide a single insurance safety net for everyone on the project.
Here are five key benefits of wrap-up insurance:
- Comprehensive coverage. With a single policy covering an entire project, you get much more comprehensive coverage and can eliminate the problems associated with coverage gaps, lapsed or expired subcontractor policies, and inadequate limits. And with more insurance carriers either refusing to handle residential construction projects due to excessive claims or charging prohibitive prices for it, a wrap-up policy gives you the purchasing power to obtain coverage.
- Higher limits. If you’re the owner of a large project that experiences a heavy loss, chances are good that your subcontractors' insurance limits won’t cover everything. That means any extra costs fall on you. A wrap-up offers greater purchasing leverage and very high limits of insurance.
- Safer job site. A wrap-up offers one standardized safety program that all parties involved in a project must adhere to. This eliminates inconsistencies and confusion, and helps get everyone on the same page with project safety.
- Fewer lawsuits. Having a single insurance carrier for an entire project translates into faster claim turnaround, less paperwork, and less cross litigation to sort out liabilities.
- Elimination of redundancies. With a wrap-up, everyone on the job site follows the same loss control and claims handling procedures, which saves time and money. And with claims administration being handled by one carrier, injured workers can get the care they need more quickly.
Relying on numerous individual policies on a large construction project automatically injects enormous risk into the project, and it’s a recipe for chaos. To see if a wrap-up policy is a good solution for your next large project, talk to the experts at Heffernan Insurance.