Wrap-Up Liability Insurance Also Known As Consolidated or Controlled Insurance Program (CIP)

Law Talk

Sam K. Abdulaziz
Attorney at Law

Wrap-Up insurance is becoming more prevalent. Therefore, we provide this article.

Wrap-Up insurance is generally known to be an insurance policy or series of insurance policies which cover all or most of the parties on a single construction project, including the general contractor, subcontractors, and suppliers. Wrap-up insurance policies are also known as Consolidated or Controlled Insurance Programs (CIP).

There are two main types of CIP's. If the policy is purchased by the owner, it is commonly referred to as an Owner Controlled Insurance Program, or OCIP. On the other hand, if it is purchased by the contractor, it is referred to as a Contractor Controlled Insurance Program or CCIP.

Historically, Wrap-Up insurance was used on large public works or commercial projects. The programs typically included multiple types of coverage such as liability, builders risk insurance and workers' compensation.

As a result of the rapid growth, owners and developers turned to project specific Wrap-Up CGL (commercial general liability) insurance policies.

As insurers became more competitive, the premiums charged for Wrap-Up CGL policies decreased significantly. As insurance carriers, owners, and contractors have become familiar with the new policy forms, the use of these policy forms continued to expand.

Further, project specific Wrap-Up CGL policies have continued to grow at a very fast rate.

Furthermore, owners can purchase extended completed operations coverage which provides protection from liability claims for as long as ten years after completion.

Owners can also obtain broader coverage under an OCIP or a CCIP than is generally available under the additional insured coverage provided by contractors or subcontractors.

The main danger to owners and contractors is dealing with new policy forms that are not well known or understood by many insurance brokers. Because of this, owners should use an experienced broker who has worked with Wrap-Up insurance coverage previously on construction projects. Contractors who are not familiar with this area should seek competent counsel.

The downside of these policies is that it is hard to insure projects, yet the upside is better potential savings and better coverage.

Again, use the services of an experienced insurance broker, risk manager, or attorney.