Risk Management Credits

Insurance Bid Credits

Contractor Insurance Bid Credits (Premium Allocation)

Premium Allocation, also known as insurance bid credits, is an optional service available from Paladin Risk Management whereby Paladin Risk Management is contracted to negotiate with potential enrolled construction participants, to determine their “fair share” of the general liability contribution towards the Wrap Up policy premium. During the wrap orientation meeting, various alternative methods of determining what method the best is for this project is discussed and evaluated. After a decision is agreed upon, contractual language is provided for the subcontract or the addendum.

Decision – Implementation

During the wrap orientation, a decision was made to have the participants provide a general liability bid credit before the participant (general & subcontractor) has been awarded and signs its Agreement Package. Then once the owner / developer / general contractor has decided upon a participant, the insured or general contractor provides Paladin Risk Management the participant’s complete contact information and Paladin begins the negotiations to ensure that the agreed upon fair share amount is collected based upon the calculation method agreed upon. If the project is a residential project located in California, contractual language and method of calculation must satisfy Assembly Bill, AB2738.

Communication – Process

Paladin contacts the subcontractor and provides an Insurance Credit Worksheet that needs to be completed. The subcontractor may need its retail broker’s assistance to complete the form. In addition to completing and returning the Insurance Credit Worksheet form, a copy of the subcontractor’s general liability policy’s declaration and rate pages are provided.

If a subcontractor is deemed uncooperative, assistance from the insured and or general contractor will be sought by Paladin to mitigate any potential construction delay and foster a united from before the participant.

Upon receipt of the completed Insurance Credit Worksheet and its GL policy’s declaration and rate pages, Paladin calculates the participant’s reasonable contribution based on its award and other factors such as the trade’s relative risk exposure.

Paladin communicates the allocation/bid credit amount with the participants and when accepted, obtains a signed Insurance Credit Confirmation document. The signed Insurance Credit Confirmation will be forwarded to the insured and or general contractor who notifies accounting to the agreed upon contribution amount from the participant. The “bookkeeping” / accounting process of how the negotiated amount is then shared with the participants.


Upon signing of the Insurance Credit Confirmation, the participant will be enrolled into the Wrap Up and issued its Enrollment Certificate.

As an exception, a participant may be enrolled into the Wrap Up while insurance credit negotiations are underway, but only upon the Owner / general contractor’s approval.

Work Change Orders

During the orientation meeting, a decision is also made that if there are change orders during the course of construction, depending upon the size of the work order generated, additional negotiations for insurance bid credits may be need to be performed.