Defining Your Risk When Considering a Wrap-Up – Part 1
This post is part of a series sponsored by TSIB.
A Wrap-Up is an incredible tool that manages the risk presented by a construction project. This tool also returns a significant part of the project cost back to your bottom line. But is it right for every project?
The first step to answering this question is to thoroughly define the risk by examining what the Wrap-Up is intended for. Not all construction work is created equal, not every project is a good candidate for a Wrap-Up, and not every insured is best served by utilizing one. To answer that we investigate what Wrap-Up program you should consider. Wrap-Ups are designed in 2 main categories: single project placements and rolling programs.
Single Project Wrap-Up Programs
A single project Wrap-Up placement is a custom product tailored to the specific needs of the project being insured. The coverage provided include:
Workers’ Compensation
General Liability
Excess Liability
Limits:
Total limits purchased generally range from $50M to excess of $200M.
Timeline:
The carrier selection, coverage negotiation, and program design all take place in the months leading up to the project construction start date.
Recommended Project Size:
Single project Wrap-Ups tend to work best and yield the greatest financial results with projects that are over $250M in construction volume. This is due to the economy of scale present in large projects. Carriers competitively rate large projects because they yield higher premiums. With smaller projects, placing a Wrap-Up is likely to be more expensive than the cost to have contractors use their own coverage, unless the project is enrolled in a rolling Wrap-Up program.
Rolling Wrap-Up Programs
Rolling programs are pre-negotiated Wrap-Up programs that allow multiple projects to be enrolled into the same program. As a new project happens, then can be included in the existing rolling program, instead of creating a new Single Wrap-Up program. The coverage provided includes:
Limits:
The limits available for purchase and the work necessary to place and administer the Wrap-Up are identical to those of a single project placement.
Timeline:
At the beginning, each new project is enrolled into the existing rolling program.
Recommended Project Size:
These work best for insureds with a steady flow of construction work. Estimating the insurance cost when using a rolling program is simple, since the Wrap-Up rates are set upfront when the program is put in place. Usually this is long before the project existed.
In part 2, we will discuss how to determine the best Wrap option. Should you have any questions or want to learn more reach out to TSIB and speak with one of our Wrap-Up Consultants.
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