Wrap Up Insurance: A Solution for Large Projects You’re a contractor on a big project.If something goes wrong, whose insurance is going to cover it: yours, your subcontractor’s or the owner’s? Large, complex projects often have a complicated jigsaw puzzle of insurance of insurance coverages.If the pieces don’t fit together correctly, you can end up with coverage gaps and disputes.

Wrap up insurance provides a simplified solution.Construction Disputes Are Getting More Costly The Global Construction Disputes Report 2021 from Arcadis shows a troubling upward trend in the cost of construction disputes.The global average value of disputes rose from $30.7 million in 2019 to $53.26 million in 2020.

In North America, dispute value increased from $18.8 million in 2019 to $37.9 million in 2020.The leading cause of disputes was when owners, contractors and subcontractors failed to understand or comply with contractual obligations.In 2020, the construction industry was hit hard by the pandemic.

Since then, labor and material shortages have continued to plague the industry.According to the Q4 2021 Commercial Construction Index from the U.S.Chamber of Commerce, 91% of contractors are having difficulty finding skilled workers, while 95% are facing at least one material shortage.

These issues can lead to increased risks and delays.Having the right insurance coverage is essential, but when contractors, subcontractors and owners are all responsible for securing their own coverages, risky coverage gaps and expensive overlaps can result.Wrap up insurance policies are commonly viewed as an effective way to simplify coverage, control costs and reduce disputes.

What Is Wrap Up Insurance? Wrap up insurance refers to controlled insurance programs (CIPs) that combine coverage for all contractors and subcontractors on a project into one insurance program.OCIPs are purchased by the owner and CCIPs are purchased by the contractor.Although these programs can be expensive, they also provide simplified coverage, so if a claim occurs, there should be little question about whose insurance is responsible.

Having a single program can also reduce or eliminate coverage disputes and redundancies that can drive up costs.Most wrap up programs are used to cover a single, large project.However, IRMI says that some wrap up policies can meet other purposes.

A maintenance wrap can remain in place indefinitely to cover ongoing contract work, and a rolling wrap up can be used to cover multiple insurance projects.Although policies can vary significantly, Investopedia says that wrap up programs often including the following coverages: Tips for Making a CIP Work Although wrap up policies can help solve many of the coverage issues that large projects face, they can come with drawbacks of their own.For one thing, they are expensive, although this is understandable considering the amount of coverage provided.

If you’re considering using a wrap up policy to manage your construction project risks, make sure the policy is truly a good fit for your project.Whether or not you’re using a wrap up insurance solution, securing the right coverage for your construction project can be a daunting task.BNC Insurance can help you obtain the coverage you need.

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