TRANSPORTATION INFRASTRUCTURE: Advantages and Disadvantages of Wrap-Up Insurance for Large Construction Projects.
Abstract
Contractors and project owners purchase insurance to protect their business assets from potential claims and losses. Under both traditional and wrap-up insurance, the project owner and construction contractors must buy the same kinds of policies. The basic types of insurance for construction projects include workers' compensation, general liability, architects' and engineers' professional liability, builders' risk, excess liability, and pollution liability.1 For some projects, more specialized insurance policies are needed. For example, construction projects on or near water must have longshoremen's and harborworkers' insurance, while projects on or near a railroad must have railroad protective liability insurance. Wrap-up insurance can provide all of these types of coverage but does not provide for automobile liability or insurance on the contractors' tools and equipment. In general, a project owner may choose from two basic types of wrap-up insurance. The simplest form of coverage is the payment of a flat premium, also known as a guaranteed cost plan. With this plan, the premiums stay the same during the term of the policy, even if a high amount of claims is paid out. The guaranteed cost plan is the more common form of coverage for small to medium-sized businesses. With the second type of plan, known as a loss-sensitive plan, the premiums depend on the policyholder's claims that are actually paid, called "losses."
Document Details
- Document Type
- Technical Report
- Publication Date
- Jun 01, 1999
- Accession Number
- ADA363875
Entities
Organizations
- United States Government Accountability Office