What is Wrap-up Liability?

 It’s a great question, and definitely not the first time we’ve heard it!

As most of the readers probably know, when someone insures a finished home, or commercial building, the policy itself will have both property insurance (to cover the structure) and liability insurance (to cover claims made against the owner). However, when a building or project has yet to be completed, and is in development stage, these two coverages are sourced and sold as separate policies.

When starting a new construction project, the lenders and other financially interested parties will require that Course of Construction insurance, or COC, be put in place to protect the physical asset from damage and destruction. In addition to the COC, the developer will need to purchase wrap-up liability, which is a policy that protects the developer(s) from liability claims made against them, regardless of the trade who was responsible for the developer(s) being named in the claim. 

On a construction site, there can be several different trade professionals coming and going every day to complete different aspects of the job. There are concrete trades, framers, drywallers, roofers, landscapers, delivery drivers, and on and on the list goes. This type of foot traffic can go on for months, even years! With so many different third-party companies and construction professionals coming and going, the risk of a lawsuit because of one of them becomes high. When developers purchase wrap-up liability policies, they are ‘wrapping-up’ and bundling all of the trades together under a single liability policy. By doing this, they eliminate the risk of a trade potentially halting or harming the financial viability of the project.

Whether it’s a small project for a single family home, or a large construction development, wrap-up liability is the best way to remove any uncertainty surrounding claims arising from third-party trades working on a project.

Looking for more information, or a quote? Give Alteri a shout at info@alteri.ca and we will be there to help!