Wrap-Up Liability Vs. Commercial General Liability Insurance

Samantha McKeag
Sep 24
3 min read

Updated: Nov 19

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The Wrap-Up Liability Difference

The most common line of coverage for the majority of the construction industry is Commercial General Liability, which is standard liability policy that a business purchases for itself to cover costs from potential lawsuits, medical bills, on-site injuries, or property damage claims made by third parties, such as contractors. It protects the business, as a whole, as well as the business's day-to-day operations.

Wrap-Up Liability Insurance, on the other hand, covers the entirety of a project. Though it's designed to protect the company as a whole, Wrap-Up Liability covers an entire project, from beginning to end, and everything that lies within it. As opposed to every third-party contractor securing their own liability coverage, which the project manager would then have to juggle, the wrap-up policy covers all third-party contractors under one master policy.

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The Wrap-Up Liability VS Commercial General Liability Insurance

Commercial General Liability		Wrap-Up Liability
Standard liability policy purchased for the business itself.	➔	Basically, an umbrella CGL policy that protects an entire project.
Covers only the insured (i.e.: the company).	➔	Covers all contractors and subcontractors working on that project.
Each contractor working on the project would need to secure their own liability coverage.	➔	One wrap-up policy covers all contractors, eliminating the need for multiple individual policies.
CGL provides on-going coverage for day-to-day operations.	➔	Coverage is limited only to the project itself.
Bottom Line: CGL Coverage is excellent for protecting the business and its operations, but does not protect a specific project or include "umbrella" coverage for third part contractors.	➔	Bottom Line: Wrap-Up Liability serves to protect a specific (usually large-scale) project in which all third-party contractors are covered under one over-arching policy.

Benefits of a Wrap-Up Liability Policy

Allows the owner/project manager to easily identify the insurance cost for the project, which is especially important for ‘cost-plus’ contracts.
For losses involving multiple subcontractors, a wrap-up policy provides a single source of coverage. This eliminates the hassle of multiple adjusters, differing terms, and coverage gaps. By consolidating the insurable interests of all parties, it also reduces disputes over responsibility and prevents cross-claims between contractors and insurers.
Wrap-up insurance providers typically have deeper expertise in construction-related liability than smaller CGL providers. When a loss occurs under a wrap-up policy, they usually assign specialized adjusters to handle it efficiently.
Wrap-up policies often provide 12–24 months of Completed Operations coverage, protecting the project during the first year of occupancy when risk and value are highest.
Relying only on your company’s CGL policy exposes you to claims that can increase future premiums and reduce the coverage available for other projects.

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