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Wrap-up liability insurance is a specialized policy commonly utilized for large construction projects. It aims to protect contractors and subcontractors by providing coverage for various liability risks. This insurance is often implemented when individual Commercial General Liability (CGL) policies held by contractors do not offer adequate coverage.
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What is Wrap Up Liability Insurance

Wrap-up liability insurance is a vital risk management tool for large construction projects. It provides comprehensive liability coverage, filling the gaps left by individual CGL policies. While it offers advantages such as consolidated coverage and broader protection, it can be costly and may lead to duplicate coverage.

Consideration of project-specific needs is crucial before opting for wrap-up liability insurance.  Wrap-up insurance for any construction projects is a significant way to protect against property damage or bodily injury to third party individuals or entities that could occur during a construction project.

Construction activities are being done almost everywhere. When it's happening in and around highly-populated areas, it is important to know how wrap-up liability insurance works for construction projects.


Wrap-up liability insurance is a specialized insurance policy that is commonly implemented for large construction projects. It provides coverage for various liability risks and is designed to protect all contractors and subcontractors involved in the project. This type of insurance is often used when the individual Commercial General Liability (CGL) policies held by the contractors involved do not provide sufficient coverage.

Working with Multi Parties

In construction projects, there are multiple parties involved, including the general contractor, subcontractors, and suppliers. Each of these parties typically carries their own CGL insurance to cover their liability exposures. However, these individual policies may have coverage limits that are inadequate for the scale of a large construction project. In such cases, a wrap-up liability insurance policy is put in place to ensure that all parties have adequate coverage.

Major Difference Between Wrap-Up Insurance and Builders Risk Insurance

One key difference between wrap-up liability insurance and builders risk insurance is the scope of coverage. Builders risk insurance primarily focuses on protecting the property and the materials involved in the construction project, as well as the hard and soft costs associated with the project. It typically covers risks such as theft, fire, vandalism, and certain weather-related damage. Builders risk insurance is usually purchased by the property owner or the general contractor and is in effect throughout the construction period.

Wrap Up Insurance protect against

It provides comprehensive liability coverage for bodily injury, property damage, and other liability exposures that may arise during the course of the construction project. It is intended to protect all contractors and subcontractors involved in the project, ensuring that they are adequately covered for potential claims or lawsuits.

Advantage of Wrap Up Insurance

The advantage of having wrap-up liability insurance is that it consolidates the coverage for all contractors and subcontractors into a single policy, which simplifies the insurance process and reduces administrative burden. It provides broader coverage limits than individual CGL policies, ensuring that all parties have adequate protection. Additionally, it helps to streamline the claims process and facilitates better coordination between all parties involved in the project.

In Short

  • Coverage uniformity; the owner and all contractors are insured in one policy by one insurance company
  • Lower cost (compared to when each contractor obtained their own insurance)
  • Easier administration of the insurance requirements as the general contractor doesn't need to monitor all subcontractors to guarantee their separate policies conform and remain in force
  • Guarantees coverage will stay in place for the project for the completed operations period
  • Avoids disputes between policies and insurance companies when more than one contractor is involved in a loss

Disadvantage of Wrap Up Insurance 

There are some potential disadvantages to consider as well. The coverage is not as broad as a standard CGL wrap-up that completely excludes the project's damage in the completed operations phase to avoid long tail construction defect exposure. Nevertheless, a standard CGL grants coverage in the completed operations phase for damage to work done on the insured's behalf by subcontractors. As the wrap-up is project-specific, contractors still require CGL coverage to insure their other operations and past work. Wrap-up liability insurance can be costly, especially for smaller contractors who may not have the financial resources to absorb the additional expense. It may also result in higher premiums for general contractors, as they are responsible for procuring the policy. Moreover, if a contractor already has a comprehensive CGL policy in place, purchasing wrap-up liability insurance may result in duplicative coverage, leading to higher overall costs.

In short, 
  • Coverage not as broad as standard CGL - Exclude damage in completed operation.
  • Contractors still require CGL coverage to insure their other operation and past work.
  • Costly.
  • Contractor may have duplicate coverage if already has own CGL.
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Frequently Asked Questions About Construction Wrap Up Insurance

Why is wrap-up liability insurance necessary in construction projects?

Wrap-up liability insurance is needed because individual insurance policies, known as Commercial General Liability (CGL) policies, may not provide enough coverage for the scale of a large construction project. It ensures that all parties involved in the project have adequate protection against potential claims or lawsuits.

Why is wrap-up liability insurance important for large construction projects?

Wrap-up liability insurance is crucial for large construction projects because it provides comprehensive protection against liability risks. In the event of accidents, property damage, or injuries, the insurance helps mitigate financial losses and ensures all parties involved have sufficient coverage.

How does wrap-up liability insurance benefit contractors and subcontractors?

Wrap-up liability insurance benefits contractors and subcontractors by filling the gaps left by individual CGL policies. It offers broader coverage, simplifies the insurance process, and helps streamline claims and coordination among project participants.

Who typically purchases wrap-up liability insurance?

Wrap-up liability insurance is usually purchased by the general contractor or property owner overseeing the construction project. They are responsible for obtaining the policy to ensure that all contractors and subcontractors have the necessary coverage.

Can wrap-up liability insurance help protect a company's reputation?

Yes, wrap-up liability insurance can help protect a company's reputation. In the event of a lawsuit or claim, the insurance provides resources for legal fees, public relations efforts, and other expenses necessary to address the situation effectively, minimizing reputational damage.

Owner-Controlled insurance Or Contractor Controlled Insurance

This type of wrap-up insurance is arranged by the project's owner to benefit the contractor to cover all listed contractors.

Meanwhile, the general contractor may use a contractor-controlled insurance program to reach coverage to all the contractors and subcontractors engaged in the project.

Why Wrap-Up Insurance Makes sense for Large Project?

Wrap-up insurance is designed for bigger construction projects. A wrap-up policy aims to provide peace of mind that everyone involved in a project is properly insured. Wrap-up insurance is a comprehensive blanket coverage that protects the owner, contractors, and subcontractors. Wrap-up insurance is necessary because it avoids every contractor and subcontractor's need to get their own liability insurance. There might be coverage gaps or insufficient limits if there were several policies in place. Instead, wrap-up insurance is more effective at guaranteeing that all of the liability hazards are covered appropriately.

For example, consider an owner-controlled insurance program obtained by the owner on the builder or contractor's account. Including add-ons, the insurance covers workers' wages, excess, professional and general liability, builder's risk, pollution and railroad protective liability. While wrap-up insurance prices can be high, the cost can be divided among the general contractors and sub-contractors.

Benefits Of Wrap-up Liability Coverage For Construction Projects When Purchased By Contractors

The business owner (lead or general contractor) obtains wrap-up liability insurance for construction projects for all contractors and subcontractors included in a construction project. Buying wrap-up liability insurance for all participants' construction projects provides peace of mind that proper insurance is in place for every individual involved. Also, by having a separate insurance carrier for the project, the risk of claims is lower, and claim resolution tends to be less costly. When contractors buy wrap-up liability insurance for a specific project, it helps keep their operating commercial general liability-free from losses. This can be particularly useful for higher-risk projects.

Benefits Of Wrap-up Liability Insurance For Construction Projects When Purchased By The Property Owner

General contractors generally do and should carry CGL insurance coverage for their works and their subcontractors' work, so having them place wrap-up liability insurance for construction projects on each project can be redundant and increase the project expense. However, if the property owner purchases wrap-up liability insurance for construction projects, the policy is in their name. The limits of that policy are dedicated to the owner and not shared by all the parties involved. When the property owner acquires the policy themselves, they shun from any markups or insurance overcharges that a contractor might add in their project pricing.

How does wrap-up liability insurance address the limitations of individual CGL policies?

Wrap-up liability insurance addresses the limitations of individual CGL policies by providing comprehensive coverage that extends beyond property-related risks. It ensures that all contractors and subcontractors have adequate protection for liability exposures that may arise during the construction project.

Who is Insured with a Wrap Up Policy?

The policy is usually arranged, paid for and controlled by the owner or contractor; but it insures the following individuals as Named or Additional Insureds concerning the project:
General contractor
Engineers, Consultants, and Architects (subject to our professional liability exclusion)
Project manager

Parties not insured?

- Suppliers
 - Security protection firms

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Extending Coverage of Wrap-Up Policy

Wrap-up insurance covers several risks for you, your project, and your workers. Policies can vary but may extend to include:

General Liability with a Broad Form Endorsement

This coverage includes all liabilities for a project, including bodily injury coverage against third-party that happen on the site or if those injuries result from work-related activities by the contractor, subcontractor, or owner. Also, it protects the third-party property against harm caused by anyone insured under the policy.

Other Construction Insurance Coverage - Builders Risk

Builders risk provides coverage for any weather, water, and fire damages to a structure under construction. In other words, builders' risk is basically the same as property insurance, except this covers structures under construction.

Other Construction Insurance Coverage - Umbrella Liability

Umbrella insurance covers beyond the limit for a general liability policy. For instance, let us say a general liability policy covers up to $2 million in losses and the umbrella liability policy grants $10 million in coverage. If there were an $8 million claim, the general coverage would provide coverage for the first $2 million, while the umbrella policy would have the remaining $6 million covered from the claim.

Other Construction Insurance Coverage - Commercial Vehicle

Commercial vehicle insurance covers vans, trucks, cars, or specialty vehicles used on the building project against liability claims and property loss.

Other Construction Insurance Coverage - Property Damage

This provides coverage for property damage of all the parties named on your policy. Also, inland marine insurance for tools and equipment that have been transported to and from the job site and equipment floaters for specialized equipment and tools can be added.

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