This post is part of a series sponsored by TSIB.
Wrap-up is a great tool for managing risk in construction projects. It also helps return a significant portion of project costs to the bottom line. But is it right for every project?
The first step in answering this question is to thoroughly define the risk by examining the purpose of wrap-up. Not all construction work is created equal, not all projects are suitable for wrap-up, and not all insureds are best served by utilizing wrap-up. To get to the answer, we will look at wrap-up programs to consider. Wrap-up can be used for both single-project deployments and Rolling Program.
Single project summary program
Single Project Wrap-Up Place is a custom product tailored to the specific needs of the project being insured. Coverage provided includes:
- Workers’ Compensation
- General Liability
- Excess Liability
limit:
Total purchase limits typically range from $50 million to over $200 million.
Timeline:
Carrier selection, scope of services negotiation, and program design all occur in the months leading up to the project’s construction start date.
Recommended project size:
Single-project Wrap-Up tends to work best and produce the greatest financial results on projects with construction size over $250 million. This is due to the economies of scale that exist on larger projects. Insurance companies rate larger projects more competitively because they can command higher premiums. For smaller projects, placing a Wrap-Up can be more expensive than the cost of having the contractor use their own insurance unless the project is enrolled in a rolling Wrap-Up program.
Rolling Wrap-Up Program
A rolling program is a pre-negotiated wrap-up program that allows multiple projects to be enrolled in the same program. As new projects arise, they can be included in an existing rolling program instead of creating a new single wrap-up program. Coverage provided includes:
limit:
The purchase limits and effort required to deploy and manage Wrap-Up are the same as for single project deployments.
Timeline:
Initially, each new project will be enrolled in the existing rolling program.
Recommended project size:
These are ideal for insureds with a steady stream of construction work. With a rolling program, estimating insurance costs is easy because wrap-up rates are set up front when the program is put in place, which is usually long before the project even exists.
In part 2 we’ll discuss how to decide which wrap option is best for you. If you have any questions or would like more information, Contact the TSIB Talk to one of our wrap-up consultants.
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