Alternative structure

Project-specific liability insurance

Not every project that needs dedicated limits needs a wrap-up. A project-specific policy gives one job its own general liability tower without enrolling a single subcontractor, and on a lot of projects that is the right answer.

Compare the three structures

We place all three structures, so there is no version of this where the recommendation is whichever one is easiest to sell.

The short version

Dedicated limits without the enrolment

A project-specific liability policy insures the named insureds for one identified project, with its own limits that no other job can use up. Subcontractors keep their own policies and are still required to carry them.

It is lighter than a wrap. There is no enrolment process, no payroll reporting, no bid deduction, no premium audit across thirty trades, and no administration contract.

It also does nothing about a subcontractor whose own policy has a residential exclusion, a low limit or a lapse. If that is the problem you are solving, you need a wrap.

On this page

What a project-specific policy does
The three structures compared
When it is the right structure
When it will not do the job
What it costs, and what drives it
The contract work does not go away
Common questions

What we place, and where

Programs: Owner-controlled (OCIP) and contractor-controlled (CCIP) wrap-ups, rolling wrap-ups, builders risk, and project-specific or practice liability where a wrap is not the right structure.
Project types: Multifamily and mixed-use, condominium and for-sale residential, podium and wood-frame, commercial, tenant improvement, and industrial.
Where: Licensed in all 50 states. Deepest bench in California, where the wrap-up statutes are covered in detail on this site.
Project size: No minimum to ask. A wrap typically starts to pay for itself around $25 million in hard construction value. Smaller projects are placed on conventional structures instead.
Who we work with: Owners, developers, general contractors, and subcontractors buying practice coverage for the off-site gap.
Who you deal with: Cary W. White, producer. ISU Insurance Services of San Francisco, CA Lic. #0778092. Cary W. White, CA Lic. #0B77854. We place coverage; we are not the carrier.

The structure

What a project-specific policy does

A project-specific liability policy insures named parties, usually the owner and the general contractor, for one identified construction project. It has its own limits, dedicated to that project, which no other job can use up. It has its own term, running through construction and for an agreed period afterwards.

What it does not do is enroll anybody. Subcontractors keep their own general liability policies and are still required by their subcontracts to carry them, to name the upstream parties as additional insureds, and to produce certificates. The project-specific policy sits above all of that rather than replacing it.

That makes it a much lighter structure to run. No enrollment, no bid deductions, no payroll reporting across thirty trades, no program administration contract, no premium audit on the subcontractors. For a lot of projects that difference is the whole reason to choose it.

Side by side

The three structures compared

There are three realistic ways to insure the liability on a construction project. They are not ranked. They solve different problems.

Conventional, project-specific and wrap-up compared
	Conventional	Project-specific	Wrap-up
Who is insured	Each party on its own policy	Owner and general contractor, by name	Sponsor, GC and all enrolled subcontractors
Subs keep own GL	Yes	Yes	For off-site work only
Dedicated project limits	No	Yes	Yes, if structured that way
Fixes a sub's coverage gap	No	No	Yes
Enrollment administration	None	None	Substantial and continuous
Bid credits from subs	No	No	Yes, and they have to be disclosed
Claims handling	Several carriers	Two layers, still several sub carriers	One coordinated program
Typical project size	Any	Mid-size upward	Larger, roughly $25m hard cost and up

The row that decides most projects is the fourth one. If the problem you are solving is that subcontractors cannot buy coverage for the work, nothing except a wrap fixes it. If the problem is that you want a reliable tower of limits over the project, the project-specific policy gets you there for considerably less effort.

Good fit

When it is the right structure

The owner wants dedicated limits and nothing more. A lender, a joint venture partner or a ground lease requires a specific tower over the project, and the concern is that the general contractor’s practice policy is shared with everything else it builds.
The project is below wrap scale. Between the point where a practice policy stops being comfortable and the point where a wrap pays for itself, this is the structure that fits.
The trade coverage is sound. Commercial work where the subcontractors can and do buy proper general liability for what they do.
Nobody can run a wrap. An owner with no insurance staff and a general contractor with no wrap experience will administer a wrap-up badly. A project-specific policy asks almost nothing of either of them.
The schedule is short. Enrollment and audit overhead hurts most on a job that is finished in nine months.
A wrap was considered and the economics did not work. This is a very common ending, and the project-specific policy is usually what it ends in.

Poor fit

When it will not do the job

There are situations where a project-specific policy looks like it solves the problem and does not.

For-sale residential. This is the main one. If the trades carry residential exclusions, a policy over the owner and general contractor does nothing about the fact that the framer and the roofer have no coverage for the work. The owner and GC are protected, the subcontractors are not, and ten years later the contribution claims between them are unfunded. On for-sale and condominium work the structure that actually responds is a residential wrap-up.

Where the point is cost recovery. A project-specific policy is a cost. A wrap-up is a cost offset by bid credits. If the business case depends on taking insurance cost out of subcontract pricing, only the wrap does that.

Where you need one claims file. A project-specific policy reduces the number of carriers in a dispute. It does not get it to one. The subcontractors’ own carriers are still in the room.

Where the subcontract indemnity is doing the heavy lifting. If the structure relies on the trades indemnifying upstream, it relies on those trades having the insurance to back the indemnity, and on that indemnity being enforceable. In California, anti-indemnity rules limit what can be required, and Civil Code 2782.9 makes indemnity unenforceable altogether for claims a wrap covers.

Price

What it costs, and what drives it

Project-specific liability is normally rated against hard construction value, with the primary layer and the excess tower priced separately. The variables:

Construction value and the scope of work being performed.
Project type, with for-sale residential priced very differently from everything else, where it can be written at all.
The length of the completed operations extension.
Limit structure, primary attachment and the height of the excess tower.
Deductible or self-insured retention.
Whether defense costs erode the limit.
The loss history of the named insureds.

It is almost always a smaller premium than a wrap on the same project, for the straightforward reason that it is covering fewer people for less. Comparing the two on premium alone is the wrong comparison. The right one is premium plus administration against what each structure actually protects.

Paperwork

The contract work does not go away

With a wrap-up, much of the subcontractor insurance question is answered by enrollment. With a project-specific policy it is answered by the subcontracts, which means the subcontracts have to be right.

That means minimum limits that are actually adequate for the trade and the project, additional insured wording on a current form with completed operations included, primary and non-contributory language, waiver of subrogation where appropriate, and a requirement that the coverage stays in force for a stated number of years after completion. Then somebody has to collect the certificates, read the endorsements rather than the certificate, and chase the renewals for the life of the exposure.

A certificate confirms a policy exists on the day it was issued. It does not confirm the policy covers the work, that the endorsement says what the subcontract required, or that the policy is still in force. On a project-specific structure that verification work is the control, and it needs to be resourced.

Questions

Common questions

What is the difference between project-specific liability and a wrap-up?

A project-specific policy insures named parties, usually the owner and general contractor, for one project, with dedicated limits. Subcontractors keep their own insurance. A wrap-up enrolls the subcontractors into the program so they are covered by it for their work at the site, which is heavier to administer and solves problems the project-specific policy cannot.

Do subcontractors still need their own insurance under a project-specific policy?

Yes, in full. They are not enrolled in anything. The subcontract requirements, the additional insured endorsements and the certificate review process all remain exactly as they would be on a conventional job.

Can a project-specific policy be used on for-sale residential work?

It can be bought, where the market will write it, but it usually does not solve the real problem. If the subcontractors carry residential exclusions, a policy over the owner and general contractor leaves the trades uninsured for the work they are doing, and the contribution claims that follow a defect action are unfunded. On for-sale and condominium work a wrap-up is normally the structure that responds.

Is it cheaper than a wrap-up?

The premium almost always is, because it covers fewer parties for less. The fair comparison is premium plus administration cost against what each structure protects, not premium alone. A wrap also offsets part of its cost through bid credits, which a project-specific policy does not.

How long does the coverage last after the project finishes?

There is a completed operations extension, as with a wrap, and the right length depends on the repose period in the state and the type of building. It has to be bought when the policy is placed.

Does it give the owner dedicated limits?

Yes. That is the main reason it gets bought. The limits belong to the project and cannot be eroded by a loss on another job the general contractor is running.

Can we start with this and move to a wrap later?

Not comfortably once construction is underway. Enrollment and bid credits have to be set up before trades are bought, and a wrap added mid-project leaves a period covered under one structure and the rest under another. The choice is worth making before the bid package goes out.

Which structure should we use?

It depends on what problem you are solving. If subcontractors cannot buy coverage for the work, a wrap. If you want a reliable tower of limits over a project and the trades are properly insured, project-specific. If neither applies and the project is modest, conventional insurance with well written requirements. We place all three, so there is no structure we need the answer to be.

Who you would be working with

Cary W. White

Managing Director · ISU Insurance Services of San Francisco

Cary handles the wrap-up placements here. He has spent 38 years in construction insurance. The first ten were on the carrier side, underwriting builders’ risk and complex property exposures. The 28 since have been in retail brokerage, advising residential developers, general contractors and other construction clients on project-specific and annual programs.

He is also one of the original authors of the project liability application that much of the industry still uses to submit wrap-ups to carriers. In practice that means he knows what each question is actually asking for, and where a thin answer will cost you at quote.

cwhite@isusf.com · 415-613-5589

Pricing

Price your project

Tell us about the project and we will give you a straight answer on whether a wrap makes sense for it. If it does not, we will say so, and then we will price the structure that does. That answer is worth more to you than a placement that costs more than it saves. There is no project minimum to ask. This goes straight to Cary White, who handles wrap-up placements for our construction clients.

The project

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You

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Anything else we should know (optional)

We will come back with a price range and what else underwriters will need. No obligation, and we will tell you if a wrap is the wrong answer.