Controlled Insurance Programs (“CIPs,” “wrap-ups” or simply “wraps”) are promoted as particularly well-suited for large construction projects, offering a single insurance program that covers all eligible participants. Theoretically, a wrap eliminates multiple carriers and duplicated coverages. However, depending on the entity sponsoring the wrap, the owner in an owner-controlled insurance program (OCIP) or a contractor in a contractor-controlled insurance program (CCIP), all boats may not be headed in the same direction, because it is the insurer that effectively maintains control of the ship.
For a wrap-up to be effective and function as intended, the project must be of sufficient dollar value, the sponsor must be capable of administering the wrap, and coverages must be adequate to apply to/respond to claims. At the same time, some disadvantages of a wrap have emerged, including potential for gaps in coverage (e.g., gaps in coverage for construction defects), ambiguity around the duration of the coverage, especially as to the beginning of the extended completed operations period, and sloppy drafting of key manuscripted endorsements.
These issues were recently addressed by the court in Liberty Surplus Insurance Corp. v. Kaufman Lynn Construction, Inc., 130 F.4th 903 (11th.Cir. 2025). Unfortunately, the result was a mixed bag for contractors and owners sponsoring a wrap-up. Read the latest posting on AGC’s Reports & Hot Topic Papers page, Operations Versus Completed Operations Coverage Under Wrap-Up Insurance Policies, authored by Pat Wielinski of the DFW office of Cokinos | Young. He filed an amici curiae brief sponsored by AGC and NAHB (National Association of Home Builders) and their Florida Chapters in support of coverage for Kaufman in that appeal.
To see AGC’s entire collection of hot topic (substantive research) papers on top business challenges facing today’s construction firms, as presented by leading experts at recent AGC Surety Bonding and Construction Risk Management meetings, visit AGC’s risk management website.