Wrap-Up Insurance: Definition, Benefits, and Real-Life Cases


Wrap-up insurance, often referred to as a controlled insurance program (CIP) or a contractor controlled insurance program (CCIP), is a comprehensive insurance policy designed to cover multiple parties involved in a construction project. It simplifies insurance procurement, reduces administrative overhead, and provides valuable protection. In this article, we explore the definition, benefits, and considerations related to wrap-up insurance. Whether you’re a contractor, subcontractor, or project owner, understanding this insurance can be essential in the construction industry.

Understanding wrap-up insurance

Wrap-up insurance is a unique and comprehensive insurance policy primarily utilized in the construction industry. It’s designed to cover a wide range of parties involved in a construction project, including the general contractor, subcontractors, and in some cases, the project owner.

Key features of wrap-up insurance

1. Single policy: Wrap-up insurance consolidates the insurance coverage for all parties involved under a single policy. This means that subcontractors don’t need to secure their separate insurance policies, reducing administrative complexities.

2. Project specific: Wrap-up insurance is project-specific, covering only the duration of the construction project. It ensures that insurance coverage aligns with the project’s timeline.

3. Coverage for all parties: It typically covers not only the general contractor but also all subcontractors working on the project. This inclusive approach streamlines risk management.

4. Controlled by project owner or general contractor: Depending on the project, wrap-up insurance can be controlled by either the project owner (owner-controlled insurance program, OCIP) or the general contractor (contractor-controlled insurance program, CCIP).


Here is a list of the benefits and drawbacks to consider.

  • Streamlined coverage: Simplifies insurance procurement with a single policy.
  • Cost efficiency: Can potentially lead to cost savings for subcontractors.
  • Reduced administrative overhead: Less paperwork and administrative tasks for subcontractors.
  • Uniform coverage: Ensures that all parties involved have consistent coverage.
  • Loss of control: Subcontractors may have less control over their insurance coverage.
  • Potential for disputes: Disagreements can arise regarding the terms and conditions of the wrap-up policy.
  • Higher upfront costs: The initial cost of wrap-up insurance can be higher for the project owner or general contractor.
  • Limited to large projects: More common in large construction projects, making it less accessible for smaller ventures.

Considerations for wrap-up insurance

When considering wrap-up insurance for a construction project, several factors come into play. It’s important to weigh the benefits and drawbacks, as well as the specific needs and circumstances of the project.

Project size and complexity

Wrap-up insurance is more common in large and complex construction projects. For smaller projects, the administrative overhead may outweigh the benefits.

Cost allocation

Determining how the costs of wrap-up insurance will be allocated among the parties involved is a critical aspect. The project owner or general contractor should establish a fair and transparent method.

Coverage limits and terms

Understanding the coverage limits and terms of the wrap-up policy is essential. This includes liability limits, policy duration, and any special provisions.

Claims management

A clear process for handling claims should be established. This includes how claims are reported, investigated, and settled.

Legal and regulatory compliance

Wrap-up insurance should adhere to all relevant legal and regulatory requirements in the jurisdiction where the construction project is located.

Example 1: A large-scale commercial construction project

In a bustling metropolis, a large-scale commercial construction project is underway, with multiple subcontractors handling various aspects of the project. To streamline the insurance process, the project owner opts for a contractor-controlled insurance program (CCIP). Under this wrap-up insurance, all subcontractors, regardless of their specialties, are covered. This not only simplifies insurance procurement but also ensures that all parties have consistent coverage. As a result, subcontractors can focus on their respective tasks without the burden of obtaining individual insurance policies. This approach reduces administrative overhead and potentially leads to cost savings, making it a practical choice for the complex, long-term project.

Example 2: Residential construction with multiple contractors

Imagine a residential construction project where the general contractor collaborates with multiple subcontractors, each responsible for different aspects of the build. In this scenario, the project owner decides to implement an owner-controlled insurance program (OCIP). By doing so, the project owner takes control of the insurance, ensuring that all parties are adequately covered. This approach simplifies the claims process, as the project owner directly handles claims. Additionally, subcontractors can benefit from the buying power of the project owner, potentially reducing insurance costs. While this type of wrap-up insurance may involve more upfront costs for the project owner, it offers greater control and consistency in coverage.

Key considerations for project owners

Choosing between OCIP and CCIP

One crucial decision for project owners is whether to implement an owner-controlled insurance program (OCIP) or a contractor-controlled insurance program (CCIP). The choice depends on factors such as project size, budget, and the level of control the project owner wants over insurance procurement.

Customizing coverage

Project owners need to work closely with insurance providers to customize coverage that aligns with the specific risks associated with their construction project. Coverage limits, deductibles, and policy durations must be tailored to the project’s unique needs.

Legal and regulatory compliance

Adhering to legal and regulatory requirements is paramount. Project owners must ensure that the wrap-up insurance program complies with all local and national laws, safeguarding the project from potential legal issues.

Benefits of wrap-up insurance beyond construction

Wrap-up insurance isn’t limited to construction projects alone. It can be adapted and utilized in various industries where multiple parties are involved in a project. This approach streamlines insurance procurement and promotes consistency in coverage. Industries such as film production, event planning, and large-scale infrastructure projects can benefit from the wrap-up insurance model, reducing administrative overhead and improving risk management.


Wrap-up insurance is a valuable tool in the construction industry, offering a streamlined approach to insurance coverage for various project stakeholders. It simplifies the insurance procurement process and can potentially lead to cost savings. However, it’s essential to carefully consider the specific needs of each project, the allocation of costs, and compliance with legal and regulatory requirements. By understanding wrap-up insurance and its advantages, stakeholders in the construction industry can make more informed decisions regarding risk management.

Frequently Asked Questions

What is the primary purpose of wrap-up insurance in construction projects?

Wrap-up insurance primarily aims to simplify insurance procurement and streamline coverage for various parties involved in construction projects. It consolidates insurance under a single policy, reducing administrative complexities and promoting uniform coverage.

Who typically controls the wrap-up insurance, the project owner, or the general contractor?

The control of wrap-up insurance can vary based on the project. In some cases, the project owner (Owner-Controlled Insurance Program, OCIP) takes charge, while in others, the general contractor (Contractor-Controlled Insurance Program, CCIP) manages the policy. The choice depends on project-specific factors.

What types of construction projects benefit the most from wrap-up insurance?

Wrap-up insurance is commonly used in large and complex construction projects where multiple subcontractors are involved. For smaller projects, the administrative overhead may outweigh the benefits of wrap-up insurance.

How is the cost of wrap-up insurance allocated among the parties involved in the construction project?

Determining the allocation of costs for wrap-up insurance is a critical aspect. The project owner or general contractor should establish a fair and transparent method for sharing the insurance expenses among all the project stakeholders.

Can wrap-up insurance be applied in industries other than construction?

Yes, wrap-up insurance isn’t limited to the construction industry alone. It can be adapted and utilized in various sectors where multiple parties are involved in a project. Industries such as film production, event planning, and large-scale infrastructure projects can benefit from the streamlined approach of wrap-up insurance in reducing administrative overhead and improving risk management.

Key takeaways

  • Wrap-up insurance streamlines coverage for all parties in a construction project.
  • It can lead to cost savings and reduced administrative overhead for subcontractors.
  • The choice between an owner-controlled insurance program (OCIP) and a contractor-controlled insurance program (CCIP) depends on the project.
  • Wrap-up insurance is more commonly used in larger, complex construction projects.
View article sources
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  2. Wrap-up Insurance – DFS.NY.gov -New york
  3. Advantages and Disadvantages of Wrap-Up Insurance for – UNT Digital library