Wrap-ups and your insurance


Wrap-ups, also known as OCIP or CCIP (Owner or Contractor Controlled Insurance Program)
depending on who is considered the “CIP sponsor” of the project, are an increasingly popular
avenue for Owners and/or Contractors to control critical elements of a construction project, including
the insurance coverage. From the insurance perspective; this concept involves
purchasing insurance policies that will cover all, or most, of the participants on the project instead of
each participant providing their own coverage for the project.  The result for the CIP sponsor is
reduced insurance costs.

Since the wrap-up policy is providing coverage for the entire project, the CIP sponsor will request
calculations of your normal insurance costs on the exposures related to their project and
deduct those costs from your contract.  In order for you to “recover” these premium deductions you
would need to make sure that any exposure related to the wrap-up project is excluded from your
insurance premium calculation on your own policies.   To accomplish this, your current insurance
policy(ies) will need a wrap-up exclusion.  Some wrap-up exclusions are “total” exclusions and
others provide “excess” coverage to the wrap-up policy.  Knowing which exclusion will apply to your
policy is a very important consideration.  Other items worth consideration would include: how long
will the wrap-up policy provide coverage after completion of the project?  Are the limits of liability
provided by the wrap-up sufficient?  Does the wrap-up policy provide “primary” coverage regardless
of other coverage available to you?  These is information that the CIP sponsor or their broker should
have worked out well before the bid process starts and the CIP sponsor or broker should be
communicating this information to you.  As a participant in a wrap-up project you have every right to
know exactly how the wrap-up policy will work.

What may not be communicated to you from the CIP sponsor is how to handle covering the
exposures related to this project that are not covered by the wrap-up policy; such as coverage for
work performed “off-the- site”.  Most wrap-ups do NOT provide coverage for work performed away
from the site that is covered by the wrap-up.  Will your own policy’s coverage apply to work
performed “off-the- site” of a wrap-up project?  A review of the wrap-up exclusion on your policy will
be necessary to determine this.   There are ways to structure your current insurance policies to
cover the gaps of the wrap-up policy.  You will want to consult with your carrier or broker
to understand the scope of the wrap-up policy and how your own policy will provide coverage for

what is not covered by the wrap-up policy.  Knowing how each policy will react before a claim occurs
will better prepare you for handling that claim if it does happen.  I hope you find this information
useful.  Please call me if you have any questions or need additional information in this regard.