Wrap-Up Insurance · For Subcontractors

Are You Covered Under the Wrap? What Subs Must Verify Before Bidding

By Tamir Lerner, Thrive Risk Management · Encino, California

When a subcontractor is invited to bid a project under an OCIP or CCIP, the wrap can look like a gift: the sponsor provides the general liability, and you strip that cost out of your number. But a wrap is a precise instrument. It covers specific parties, for specific operations, on a specific site, for a specific window of time. Enroll blindly and you can end up uninsured for exactly the exposure you assumed was handled.

Here is what to verify before you commit a price.

1. Am I actually enrolled — and is my full scope covered?

Enrollment is not automatic. You submit enrollment paperwork and receive confirmation that your company and your scope of work are accepted into the program. Confirm:

• Your legal entity name is on the enrollment, matching your bid and contract.
• Your trade classification is one the program accepts. Some classes — abatement, blasting, certain design work — are commonly excluded and must carry their own coverage.
• The entire scope you’re bidding is enrolled. If part of your work happens off the covered site, that part is likely not wrapped.

An enrollment gap is not just a paperwork problem — it means a claim on unenrolled work falls to your own policy, or worse, to no policy at all.

2. What coverages and limits does the wrap actually provide?

Do not assume. Get the program’s insurance manual or a coverage summary and read what is included:

• General liability — almost always. Confirm the per-occurrence and aggregate limits, and whether the aggregate is shared across all enrolled parties.
• Workers’ compensation — sometimes included for on-site labor, sometimes not. If it is, you still typically keep your own WC for off-site employees.
• Excess / umbrella — whether there is a layer above the wrapped GL and how high it goes.
• Deductibles or self-insured retentions — who pays them, and whether any flow down to you.

Shared aggregate limits are a common surprise. If limits erode from other trades’ claims, less may be available when you need it — a reason to keep adequate practice coverage of your own.

3. Which of my operations fall OUTSIDE the wrap?

This is where most subs get exposed. A wrap is tied to on-site project operations. The following are usually not covered by the wrap and remain your responsibility:

• Off-site fabrication, shops, and staging yards.
• Owned tools, equipment, and materials — the wrap is liability, not property coverage.
• Automobile liability — your trucks and drivers, on the way to and from the site.
• Professional liability for any design-assist or engineering you provide.
• Every other project you’re working — the wrap responds only for this job.

Because of these gaps, most owners and GCs still require enrolled subs to maintain their own practice policies for the excluded exposures. Bidding a wrap job does not mean you can cancel your insurance program.

4. How long does the completed-operations tail run?

The wrap covers injury and property damage during construction, but the completed-operations extension is what protects you for claims that surface after the job closes — a defect that causes damage years later, for example. The length of that tail is negotiated and varies by program. Verify:

• How many years the completed-operations coverage extends past project completion.
• Whether that period is adequate for your trade’s long-tail exposure and for California’s construction-defect timelines.
• What happens if it’s shorter than you need — you may want your own coverage to fill the gap.

We go deeper on this in our article about the completed-operations gap after a project closes.

5. How does the wrap change my bid?

Because the sponsor provides the project GL, you deduct your normal insurance cost for that scope from your bid — the “bid deduct” or “insurance credit.” That deduction has to be calculated accurately: deduct too much and you erode your margin, too little and your bid isn’t competitive. It should reflect only the cost you genuinely save by not insuring this project’s on-site GL yourself — not your entire insurance program. Our article on deductions and credits in a wrap-up bid walks through the math.

Sources & further reading

• IRMI — Wrap-Up Insurance Program (definition)
• IRMI — Completed Operations
• California DIR — Division of Labor Statistics & Research