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What you
need to know about Wrap-up Insurance:
WHAT IS A WRAP-UP
POLICY?
A wrap-up policy (also known as an Owner Controlled
Insurance Policy "OCIP" or Contractor Controlled
Insurance Policy "CCIP") is a single insurance policy
naming all construction participants for coverage on all
general liability and/or workers’ compensation risks on
a given project. In addition to consolidating all
insured's onto one policy, it typically provides
occurrence coverage for a period of ten years from the
date of completion of the project, thus eliminating the
need to purchase ongoing policies for the duration of
exposure to construction defect claims.
WHAT DOES A WRAP-UP POLICY TYPICALLY COVER?
A wrap-up policy covers general liability exposure for
claims arising from the construction project. Typically,
the Commercial General Liability insurance form is
broadened to encompass most bodily injury or property
damages arising out of the construction, regardless of
how the loss happened. If workers' compensation coverage
is also chosen for the policy, all job site injuries are
also covered. Not all wrap-up policies automatically
include workers' compensation coverage.
WHAT
ARE THE BENEFITS OF WRAP-UP POLICIES?
Under the wrap-up policy, there is no need to allocate
blame for any third-party injury or property damage,
since all participants are on the same policy. This
allows a consolidated claims handling process between
the owner and the claimant, leading to speedy and early
resolution.
Traditional risk transfer strategies rely upon
contractual and insurance relationships between the
owner, general contractor and subcontractors. The owner
seeks to have the general contractor and subcontractors
indemnify and name the owner as an additional insured on
the general contractor’s insurance policy. The owner
must rely upon the ability of the general contractor to
procure the correct insurance and to continue to procure
such insurance for the duration of the exposure to
construction defect risks, even after the owner and
general contractor have no further business
relationship.
. . .
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