Wrap-up insurance programs | an overview

Wrap-ups, used primarily in construction projects, make it easier to control exposures.

posted September 12, 2017

A wrap-up, more formally known as a controlled insurance and risk control program (CIP), is sponsored by a contractor or project owner. The program covers the owner and all participating, or enrolled, contractors and subcontractors on a specifically identified jobsite. CIPs may be owner-controlled (OCIP) or contractor-controlled (CCIP).

The goal of wrap-ups is cost savings based upon the economies of scale available in consolidating the insurance on large capital projects. They can create efficiencies (administrative, procurement, safety) by replacing many small insurance programs with a single, large program.

However, cost savings are not the only benefit of a wrap-up. Other incentives include 

  • Safety oversight (facilitating compliance with the mandatory safety and health program)
  • Return-to-work program participation
  • Providing continuity of coverage (including the limits purchased and claims handling), and
  • Creating solutions for insurance availability problems-making it possible for disadvantaged business and emerging enterprises to participate in large construction projects.1

These programs typically include general liability and excess, and may include workers' compensation. Oregon has a provision for mini-wrap-ups, which are general liability and excess-only wrap-ups.

DCBS must approve workers' comp wrap-ups. Those which include workers comp are construction projects with an aggregate value of $90 million or more.

Divided-risk endorsements
Contractors quoting to participate in a wrap-up quote at net; that is, they do not add in the cost of insurance since they will be charged insurance in the wrap-up program. In order that the contractor does not get charged twice, a divided-risk endorsement may be added to the SAIF policy.

In order for SAIF to add this endorsement, we need information on the project, and if it's a DCBS-approved project. More information, including what projects are approved, can be found on the Division of Financial Regulation website.

A divided-risk endorsement is commonly added to an OCIP or CCIP.

What we require
SAIF underwriters require the following to add divided-risk endorsements.

  • Name of the project
  • Verification that the contractor is enrolled in a DCBS approved project by providing a copy of the enrollment form.
  • Verification that the contractor was covered under the wrap-up by providing a copy of the policy or certificate of insurance showing coverage, if the insured failed to provide us this information at the onset of the wrap-up
  • Verification on insured letterhead that no known claims were filed with SAIF 

[1] Excerpt taken from The Wrap-Up Guide, Fourth Edition, published by International Risk Management Institute, Inc.