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Wrap-Up Programs

Navigating Wrap-Up Programs in Construction: Overcoming Challenges with Best Practices

Seth Oswald | July 11, 2025

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Ensuring accurate insurance coverage in the complex world of construction risk can be a daunting task. To help manage these risks, project sponsors are often turning to wrap-up insurance programs, also known as controlled insurance programs (CIPs). However, navigating these programs can be tricky. Whether you are an owner, general contractor, or subcontractor, following best practices will help ensure a successful wrap-up project.

Understanding Wrap-Up Insurance

Unlike traditional insurance models, wrap-up insurance programs consolidate specific coverages into a single policy for all enrolled parties. A wrap-up program is designed to cover the liability of a construction project from start to finish and can be controlled by either the project owner or the general contractor. The owner controlled insurance program (OCIP) is purchased by the owner, while the contractor controlled insurance program (CCIP) is secured directly by the contractor. The entity that purchases the program becomes the wrap-up sponsor, and the program is managed by a wrap-up administrator who ensures proper enrollment, maintains documentation, and oversees compliance with insurance requirements.

One key consideration for wrap-up sponsors to be aware of is that not all project participants are automatically covered by the wrap-up program. Eligible participants refer to individuals or firms that do not fall under the "excluded parties" definition. (Eligible participants must complete and obtain written confirmation of enrollment to ensure coverage under the wrap-up.) In contrast, excluded parties are ineligible to be enrolled in the wrap-up program. The wrap-up sponsor has the authority to specify which contractors are excluded, but typically, parties such as abatement contractors, design professionals, suppliers who are merely delivering materials to the site, and equipment rental companies would be excluded.

Understanding the Bid Stage

A well-prepared bid lays the foundation for a successful project; therefore, it is essential for contractors to fully understand the project's scope and requirements. To gain an advantage over the competition and secure better insight into the project, contractors should consider attending pre-bid meetings. First impressions matter, and the pre-bid meeting is the contractor's chance to make a strong first impression on the project owner. Additionally, it gives the contractor an opportunity to gather detailed information about the wrap-up program and clarify the specific requirements and expectations of the project prior to submitting a bid.

When bidding on a wrap-up project, it is crucial for contractors to clarify bid requirements and communicate them clearly to all subcontractors. This includes understanding whether to bid net (excluding insurance costs), net bid with add alternate (a base bid excluding insurance costs, accompanied by documentation specifying the excluded amount), or gross bid with deduct alternate (a base bid including insurance costs, along with documentation specifying the insurance costs to be deducted if enrolled). Each bid method has its own advantages and challenges. (See Tim Walsh's Expert Commentary article, "Wrap-Up Insurance Credit Methodologies," from September 15, 2021, for additional details on bid methods.) Regardless of the bid method, contractors are encouraged to implement a standardized bidding method for all subcontractors to promote consistency, fairness, and clarity throughout the bidding process.

Contractors are usually required to submit an Insurance Cost Worksheet (ICW) with their bid. The ICW calculates the amount of insurance costs that have been incurred if the contractor has secured their own insurance coverage. Essentially, this provides a "credit" so that the contractor is only charged once for the exposure of their work under the wrap-up project. However, determining the accuracy of the exposure used in the calculation can be challenging for wrap-up administrators. To address potential discrepancies, program sponsors may include a "True-Up" provision in the contract, which allows for a final adjustment to the insurance premium or credit when work is complete. To avoid unexpected financial adjustments at the end of the project, the contractor should inform lower-tier subcontractors that a final "True-Up" will be conducted and final payment will be withheld until the wrap-up administrator completes their final calculation.

Understanding the Enrollment Process

The wrap-up enrollment process can vary depending on the wrap-up administrator, ranging from handwritten forms to fully digital submissions uploaded to an online portal. Regardless of the format, contractors are typically required to submit an insurance cost worksheet, proof of insurance coverages not provided by the wrap-up, and recent loss runs to complete enrollment. Keep in mind that, while participation in a wrap-up program is usually mandatory for all eligible contractors working on the project, enrollment is not automatic. Eligible contractors must complete the enrollment process and receive written confirmation from the wrap-up administrator. This confirmation serves as evidence of coverage, and contractors should not commence work on the project until this written confirmation is received. Additionally, it is beneficial to verify that subcontractors are properly enrolled, as delays in their enrollment can postpone project work and disrupt the schedule.

Maintaining enrollment in a wrap-up program is not a one-time task; it requires ongoing administration. Contractors must regularly submit certificates of insurance and specified endorsements, monthly workers compensation payroll reports, and incident documentation. These submissions are essential for the program sponsor to verify that all participating contractors maintain appropriate coverage, contribute proportionally to the program's risk pool, and actively manage safety on the jobsite. Establishing a feedback loop with the wrap-up administrator and subcontractors is a proactive way to ensure ongoing compliance. Providing clear instructions and conducting regular follow-ups with all parties can help prevent delays, miscommunications, and unnecessary compliance issues.

Understanding Wrap-Up Exclusions

Most contractors' corporate insurance programs exclude work performed under a wrap-up, which makes sense in theory, since payroll for that work is reported to the wrap-up insurer, not the contractor's own insurer. Unfortunately, not all wrap-up exclusions are equal in scope, especially with respect to how and if coverage is excluded when the wrap-up coverage is no longer in effect. For example, if a contractor's corporate policy excludes all wrap-up projects "whether or not coverage remains in effect," the contractor runs a risk of having no coverage for a claim on that project if the wrap-up policies are canceled or lapsed. To avoid potential coverage gaps, contractors should review their policies for this exclusion and, if necessary, consider obtaining coverage that sits excess and contingent over the wrap-up program. This would provide an additional protection if the wrap-up limits are exhausted or if unforeseen coverage gaps arise. 1

Understanding Claims Management

Contractors participating in a wrap-up program should be proactive in the claims management process even if the program is sponsored by another entity. Staying involved in this process helps control costs and ensures injured employees receive the care and support they need. Also, contractors should be aware that, despite being insured under the wrap-up, employee injuries will still impact their experience modification rate and must be recorded on their OSHA 300 log.

Establishing a strong relationship with the third-party administrator and attending quarterly claims meetings are effective ways for the contractor to stay engaged in the claims management process. Additionally, training the project teams on what is covered under the wrap-up policy and how to properly report incidents can significantly reduce delays and prevent claims from being filed incorrectly.

Maintaining a repository of all wrap-up documentation—including manuals, bid documents, addendums, loss runs, and any communication from the wrap-up administrator—is also highly recommended. This repository should be preserved through the statutory period of repose (the state-mandated time frame in which a claim can be filed after project completion) to ensure that all necessary information is readily available should a claim arise.

Understanding Work Completion

As a wrap-up sponsor, it is essential to confirm that coverage under the wrap-up program does not expire prior to work completion, as defined by the policy. The wrap-up sponsor should track the policy's expiration date and pen a notice 30–45 days in advance to alert any relevant lower-tiered parties. This allows time to take appropriate action to renew or extend the coverage, if necessary.

To properly document project close-out, both the contractor and subcontractors must notify the wrap-up administrator when their scope of work is complete. Once the administrator is notified, all contractors covered under the wrap-up program may be subject to a final audit.

Even after construction ends, contractors may still be held liable for property damage or bodily injury resulting from their completed work. A completed operations extension provides protection for losses that occur during this postcompletion liability period. The Extended Products-Completed Operations Hazard endorsement should be included in the wrap-up policy for this purpose and aligned with the applicable state statute of repose. For example, if the state in which the project is located has a 10-year statute of repose, the extension should ideally cover that full period. It is also important to understand what triggers the start of this extension. Each wrap-up policy may define different triggering events, such as substantial completion, issuance of a certificate of occupancy (temporary or permanent), or the point at which the project is put to its intended use. Contractors should review this language carefully to ensure adequate coverage throughout the liability period.

Conclusion

As the popularity of wrap-up programs remains constant, contractors should be familiar with common pitfalls that can occur from inception to project completion and beyond. By implementing best practices during the enrollment process and understanding the nuances surrounding exclusions, claims management, and work completion requirements, contractors can potentially avoid costly mistakes and unnecessary liability burdens.

This article is derived from a presentation titled "Best Practices for Contractors Participating in a Wrap-Up" at the 2024 IRMI Construction Risk Conference (CRC). Learn more about CRC, and plan to join us for our next Conference!


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.


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