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Wrap-Up Insurance Often Difficult for Condo Developers to Get

ORANGE COUNTY, CA-More residential construction projects are being insured using wrap-up insurance programs today, a product that has been a mainstay of the commercial construction industry for years. Still, most insurers will not approve wrap-ups on multifamily unless tied in with another product like

By Joel Cone | Updated on October 18, 2000

ORANGE COUNTY, CA-A mainstay of the commercial development industry for many years, wrap-up liability insurance programs, are gaining popularity with residential developers and builders.

Designed to cover all job-site related risks for owners, developers and their subcontractors, wrap-ups have been a popular product for commercial projects where construction costs are estimated to equal or exceed $100 million. Taking into consideration all trades involved in a project, payroll of at least $20 million is another benchmark measurement for needing a wrap-up.

According to Jamie Knoop, broker consultant for construction clients at the Newport Beach office of Marsh, convincing insurance companies to allow wrap-ups on residential projects was a tough sell initially. Then a 1995 decision by the California Supreme Court changed the way insurance limits are applied to construction defect claims. The new law made it difficult for subcontractors to get liability insurance, which caused insurance companies to at least consider doing residential wrap-ups.

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