General Liability Wrap – Owner-Controlled Insurance Policy for a Specific Project
If this is the first time that you’re checking into Wrap policies, you’ve come to the right place. Due to changes in the marketplace there are many new options that were not previously available. If you already have experience with Wraps, you may be surprised to find what SCIS can do for you.
Specialty Contractors Insurance Services, Inc. has General Liability Wrap Programs that start as low as $50,000 for $1,000,000 of coverage. All we need is a moment of your time and you’ll find it’s time well spent.
If you are not familiar with Wraps, read our list of FAQ’s below:
- What is a Wrap?
A Wrap, also known as an OCIP or CCIP (Owner-Controlled Insurance Policy or Contractor Controlled Insurance Policy), is a commercial general liability insurance policy issued for a specific project which includes coverage for the builder/developer, general contractor, and subcontractors performing trade work on the project. It will typically include third-party liability coverage for the period of time the construction project is going on, as well as extended “construction defect” coverage for the structures once they have been completed and sold, for a period of up to ten years post-construction. Limits in coverage start at $1,000,000 per occurrence, with additional coverage available in increments of $1,000,000 (for additional premium of course). All wrap policies are not the same. In fact, each insurance company uses unique “manuscript” wording in their policies which may limit coverage. You will have choices when it comes to the type of coverage you buy. It is important to work with a broker that understands the differences in coverage and can explain how they effect the cost of each policy. That broker is SCIS.
- Why Are There Wraps?
When considering all of the companies involved in order to complete a construction project, it can be overwhelming. There’s the developer, general contractor, sub contractors, architects, engineers, suppliers and the list can go on. Contractors in these positions are expected to provide their own insurance for the project. This, of course, made sense. The company responsible for the loss would have their insurance step up to the plate. Here’s where the problems arose. With the numerous companies involved in each construction project along with the differences in each insurance policy wording & the interpretation by the courts, it became a game of “Dog Eat Dog.” This was most evident in cases involving multi-unit residential construction (i.e. condos, townhouses, & large tract subdivisions). Homeowners associations, along with the support of multiple homeowners, sued the builders who sued the sub contractors who sued suppliers and so on. Before long, insurance carriers for both general contractors and sub contractors alike excluded all coverage that had anything to do with these types of projects. This resulted in developers without contractors to do the work-around which in turn resulted in the “Wrap”.
- Why Should You Use a Wrap?
In many cases general contractors and sub contractors can’t work on certain types of residential projects unless there is a wrap, therefore you may not have a choice. Their current insurance almost always specifically excludes multi-unit residential & mixed use commercial/residential projects & they are not willing to jeopardize their business by working on a project without insurance. Also, many lenders and municipalities require wraps for these certain types of multi-unit residential & mixed-use commercial/residential projects.
Besides the fact that there are no options other than a wrap, there are some advantages to using a wrap, including:
- Removes the incentive for plaintiffs’ attorneys & diverts potential frivolous claims.
- Opens the door for a larger pool of General Contractors & Sub Contractors to bid on the project.
- Creates a more cooperative setting between the Developer & Contractors instead of the game “Dog-eat-Dog”
- One policy to answer for all construction-defect related claims.
- Gives the Developer and Builder new strategies in risk management.
- What Does it Take to Get a Quote?
Choose the right broker… one with experience and knowledge of the wrap marketplace. Premiums are high enough for these types of policies, no need to waste more money because you took a chance with a broker who is unfamiliar with wraps.
First impression matters! Once insurance company underwriters deem your project as “risky” it will take a miracle to change their minds. SCIS makes sure that your project makes a great first impression. After the underwriters have labeled your project as a good risk and see that you’re represented by a company they know specializes in wraps, they’ll be more willing to apply discounts to your quote and do whatever it takes to get it sold.
- What does the Application Consist Of?
SCIS has access to every wrap program available in California, Nevada, Oregon, Colorado, and Washington. Let us help you put more of your profit into your pocket instead of the insurance companies.
Just fill out the contact us form and we’ll get back to you by the next business day.
- What does the Application Consist of?
Most insurance companies that offer wrap policies in California have the same basic requirements:
- Completed project application
- Recent copy of a geotechnical / soils report
- Construction budget showing cost breakdown by trade
- Project site plan
- Insurance history for the general contractor for five years including current loss runs
- Builder’s resume of past projects (not always mandatory, but helpful)
- Developer and/or GC financials (not always mandatory, but helpful)
- How Do The Insurance Company Requirements Vary?
Every insurance company that writes wrap policies in California has unique set of “underwriting guidelines.” Based on the specifics of your project there will be some companies that will be a better fit than others, for example one company will only look at projects where there are no more than 16 units per structure, while others prefer much larger projects.
Each company also has its own “minimum premium” which sets the bar on what the lowest price available is. It is always our goal to get your premium as close to the minimum premium as possible.
- What Else May Be Required?
There are a number of outside risk management services that may be required by insurance companies when you purchase a wrap. These requirements vary depending on the insurance company and include:
- Project risk assessment including prime and sub contract review, site safety, and project documentation procedures.
- Wrap administration including sub enrollment, deductible sharing, and premium recapture options.
- Construction peer review including plan check and site inspection services.
- Post construction customer service and warranty programs