Why is wrap-up insurance preferred over traditional insurance?
If you’re embarking on a large project, you’ve probably heard about wrap-ups and understand the basic concepts, but maybe aren’t quite convinced. To help you decide between getting wrap-up insurance or traditional insurance, here are the basics, along with the benefits of a wrap-up!
On a project, there are potential ways to reduce costs through savings garnered by the implementation of a wrap-up. Within every contractor’s insurance cost is their insurance carrier’s allocation for claims. The sponsor uses its economic of scale and integrated risk management programs to secure lower insurance claim costs. In turn, this reduces construction costs.
While financial considerations may be one reason to implement a wrap-up, there are some big benefits to choosing this insurance policy.
Instead of depending on multiple policies of varying degrees of limits, the sponsor is able to secure much higher limits at more cost-effective rates. Wrap-up insurance is more cost effective because a single insurer is the control point for all claims and can streamline the claims processing.
Range of Coverage
Wrap-up insurance eliminates duplications in coverage that occur when each contractor purchases independent insurance. Typically, contractors and subcontractors purchase an overlap in coverage because they are insuring themselves for the same accidents. The duplication can also result in litigation between the respective insurance companies due to claims. Ideally, wrap-up insurance should reduce potential litigation because a single carrier is responsible for all claims.
With one centralized program, there is no more finger pointing. Everyone’s interests are aligned and the sponsor will select coverage counsel before the wrap-up insurance kicks in. The counsel will be specific to liability and workers’ compensation. With all parties working together, there is minimal conflict and reduced litigation.
Wrap-up insurance provides the opportunity to reduce project costs while integrating state-of-the-art risk management programs. To get started on securing this coverage, contact Nahai Insurance today.