What does Wrap-up Liability insurance do in a construction project?

Wrap-up Liability insurance is a specialized type of insurance designed to provide coverage for all parties involved in a construction project, which typically includes the general contractor, subcontractors, and sometimes owners. By accepting project-related risks on behalf of the homeowner, this insurance consolidates coverage for various risks associated with the project under one policy. This means that any liabilities arising from the construction process, such as bodily injury or property damage, can be addressed through this singular insurance policy rather than requiring each contractor and subcontractor to secure their own insurance.

This can simplify the insurance process, making it easier for project owners by offering them peace of mind and reducing potential gaps in coverage. The wrap-up serves as a way to manage and mitigate risk more effectively across all parties pro-rata, without transferring all risks solely to subcontractors or focusing only on insuring the homeowner or the general contractor.

The other options do not accurately reflect the function of Wrap-up Liability insurance; it does not transfer all risks to subcontractors, as it centralizes risk management. Additionally, it does not target only the homeowner or solely the general contractors but rather covers all involved parties to ensure comprehensive protection throughout the project.