A wrap puts together under a single policy core lines of coverage – General Liability, Excess Liability, and/or Workers’ Compensation – that covers all contractors working on a project and often the project owner. A wrap should be complemented by other policies, as well, such as Builder’s Risk, Environmental Liability and Professional Liability insurance, to provide the broadest scope of protection to the risk.
An OCIP is held by the property owner during the construction or renovation of a property, and provides the owner with direct control over administrative costs in dealing with a single insurance broker. A CCIP is similar to an OCIP except that the general contractor (GC) or construction manager sponsors the insurance program. Under both types of wraps there is clarity of coverage because all participants fall under the same policy. This is compared to the traditional approach, where the owner, general contractor and subcontractors all have different policies from different carriers, with different coverages, exclusions, deductibles and limits. Without this overarching policy, there may be gaps if one subcontractor has different coverage or limits. With an OCIP or CCIP, you’ll have the comfort of knowing that everyone on the project is covered.
Additionally, with a wrap you get continuity of coverage after a project is completed, which is critical as the potential for liability remains. A wrap oftentimes provides coverage for all participants through the statute of limitations for completed operations/construction defect exposures. For example, in California, your exposure for construction defects can remain for a decade after completion of the project. Under a traditional insurance structure, if a sub or general contractor doesn’t renew their annual policy or if they go out of business and an incident occurs, liability could fall solely to you as the owner or developer. With an OCIP or a CCIP, you can have a policy in place through the statute of limitations for one price that doesn’t need to be renewed each year.
You’re also able to get higher limits on an OCIP or CCIP than individual subcontractors would have provided or could obtain.