Coverage Guides
Wrap-up insurance programs consolidate general liability, workers compensation, and sometimes other coverages for all contractors on a construction project under a single policy. Instead of each contractor carrying their own insurance, the wrap-up sponsor purchases one comprehensive program covering all enrolled parties. This approach is typically used on large projects exceeding $50-100 million where the scale justifies the administrative complexity. Wrap-ups can produce cost savings of 10-20% compared to the aggregate insurance costs of all contractors using their own policies, primarily by eliminating duplicate coverage and leveraging the project scale for better rates. Two main types exist: Owner Controlled Insurance Programs (OCIP) purchased by the project owner, and Contractor Controlled Insurance Programs (CCIP) purchased by the general contractor.
In an OCIP, the project owner sponsors and purchases the wrap-up program. The owner selects the insurers, sets coverage terms, and manages enrollment. All contractors on the project are required to enroll and are covered under the OCIP policies. Contractors must back out or deduct their normal insurance costs from their bids since the OCIP provides coverage. The owner benefits from centralized safety management, unified claims handling, and potential cost savings. OCIPs typically cover GL, workers comp, and sometimes builders risk and excess liability. They may exclude commercial auto and professional liability, which contractors must continue carrying on their own policies. Enrolled contractors must comply with OCIP safety requirements and reporting obligations.
A CCIP functions similarly to an OCIP but is sponsored by the general contractor rather than the owner. The GC purchases and manages the program, enrolling subcontractors as they are awarded work. CCIPs give the GC direct control over safety programs, claims management, and coverage terms. Subcontractors deduct their insurance costs from bids and are covered under the CCIP. The GC benefits from centralized risk management and potential cost savings that improve overall project pricing. CCIPs are common when the GC manages a rolling program covering multiple projects rather than a single project. Large national GCs with sophisticated risk management departments frequently operate CCIPs covering their annual project portfolio.
Enrollment in a wrap-up program involves providing your company insurance information, payroll data, and employee rosters to the program administrator. You must sign enrollment agreements acknowledging that the wrap-up provides your project coverage and agreeing to comply with program requirements. Key compliance obligations include reporting monthly payroll to the wrap-up administrator, following program safety requirements that may exceed your normal practices, reporting all incidents through the program claims process rather than your own policies, completing program-specific orientation and training, and maintaining your own insurance for non-enrolled exposures. Failure to comply with enrollment requirements can result in de-enrollment, leaving you without coverage on the project.
When enrolled in a wrap-up, subcontractors must deduct their normal GL and workers comp insurance costs from their bid or contract price. This deduction, called the insurance credit or wrap-up deduction, represents the cost the subcontractor would have incurred if carrying their own insurance. Standard deduction percentages vary by trade, typically ranging from 3-8% of contract value. The deduction should reflect actual insurance costs, not inflated amounts. Contractors must ensure their own policies properly exclude wrap-up project coverage to avoid paying for duplicate coverage. A wrap-up exclusion endorsement on your own GL and workers comp policies accomplishes this. Your insurance costs do not decrease during wrap-up participation because your own policies exclude the enrolled project, meaning your premium base is reduced correspondingly.
Wrap-up programs are most effective on large single-site projects with significant subcontractor involvement, long project durations, and concentrated exposure. Projects under $50 million rarely justify the administrative costs of a wrap-up program. The best candidates include major commercial developments, institutional campuses, large infrastructure projects, industrial facilities, and sports venues. Projects with multiple small sites, short durations, or limited subcontractor involvement are poor candidates. ALKEME advises both owners and contractors on whether wrap-up programs make financial sense for specific projects, including cost-benefit analysis comparing wrap-up costs to traditional insurance approaches.
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