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Objectives Understand ideal coverage under wrap- ups Understand difference in coverage between corporate and wrap-up insurance programs Identify potential.

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Presentation on theme: "Objectives Understand ideal coverage under wrap- ups Understand difference in coverage between corporate and wrap-up insurance programs Identify potential."— Presentation transcript:

1 Objectives Understand ideal coverage under wrap- ups Understand difference in coverage between corporate and wrap-up insurance programs Identify potential gaps created by  Length of coverage  Location of coverage  Exclusions (corporate and wrap-up) “WRAP TRAPS”

2 Avoiding Gaps in Coverage Coverage Gap Wrap-up Insurance Corporate Insurance Liability

3 “WRAP TRAPS” Potential Gaps Scope Project location description  Off-site exposures Length of coverage  Completed operations Who should be enrolled? Limits and deductibles Coverage

4 “WRAP TRAPS” Potential Gaps Exclusions Asbestos and Nuclear EIFS Professional Liability/ Architects & Engineers Pollution Except Hostile Fire Automobile Liability

5 “WRAP TRAPS” Coverage Provided By Enrolled Contractor Wrap-Up Corporate Certificate Certificate WC On-site Off-site GL On-site Off-site Auto No Coverage On- & Off-site Umbrella On-site Off-site REQUIRED ENDORSEMENTS Additional Insured Primary/Noncontributory Cancellation Amendment Waiver of Subrogation Per Project Aggregate

6 “WRAP TRAPS” Corporate insurance policy covers completed operations for that policy year only Completed OperationsProject Period Policy Year 13 Multiple Policies/Various Rates Corporate Insurance Policy Year 1 Policy Year 2 Policy Year 3 3-Year C/O Policy Years 1-3 Policy Year 6 Policy Year 13 Wrap-up Insurance One Policy/Fixed Rate Completed Operations

7 “WRAP TRAPS” Excludes  Wrap-up project by name  Blanket wrap-up exclusion OR Covers  Period beyond completed operations  Above wrap-up limits  Insolvent wrap-up  May drop down if wrap-up excludes coverage Corporate CGL Policy

8 “WRAP TRAPS” Completed Operations Project Period Policy Year 13 Multiple Policies/Various Rates Corporate Insurance Policy Year 1 Policy Year 2 Policy Year 3 3-Year C/O Wrap-up Insurance One Policy/Fixed Rate Policy Years 1-3 Policy Year 6

9 “WRAP TRAPS” Corporate CGL Endorsement #1 “ongoing operations or operations included in the ‘products-completed operations hazard’ … as a consolidated insurance program has been provided.” Corporate insurance may cover completed operations period from year 3 through year 13 Excludes:

10 “WRAP TRAPS” Completed Operations Project Period Policy Year 13 Multiple Policies/Various Rates Corporate Insurance Policy Year 1 Policy Year 2 Policy Year 3 3-Year C/O Wrap-up Insurance One Policy/Fixed Rate Corporate insurance may cover completed operations period from year 3 through year 13 Policy Years 1-3 Policy Year 6

11 “WRAP TRAPS” “any Wrap-Up that You are or ever were involved in.” Corporate CGL Endorsement #2 Corporate insurance will not cover any claim in year 3 through year 13 Excludes:

12 “WRAP TRAPS” Completed Operations Project Period Policy Year 13 Multiple Policies/Various Rates Corporate Insurance Policy Year 1 Policy Year 2 Policy Year 3 3-Year C/O Wrap-up Insurance One Policy/Fixed Rate Corporate insurance will not cover any claim in year 3 through year 13 Policy Years 1-3 Policy Year 6

13 “WRAP TRAPS” “Wrap-Up… in which You are, were, or became a participant” Corporate CGL Endorsement #3 Corporate insurance will cover any claims in year 3 through year 13 along with any excess coverage during construction Excess to: Best coverage possible Provides coverage on a DIC basis Can be provided (ask!)

14 “WRAP TRAPS” Completed Operations Project Period Policy Year 13 Multiple Policies/Various Rates Corporate Insurance Policy Year 1 Policy Year 2 Policy Year 3 3-Year C/O Wrap-up Insurance One Policy/Fixed Rate Corporate insurance will cover any claims in year 3 through year 13 along with any excess coverage during construction Policy Years 1-3 Policy Year 6

15 “WRAP TRAPS” On-site/Off-site Off-site Storage Area Contractor’s Office Lay Down Area Staging Facility Lay Down Area Staging Facility Lay Down Area Staging Facility Storage Area Project Address On-site

16 “WRAP TRAPS” Lay Down Area Incident Sub (Employer) Lay Down Area Project Address Employee injured moving material

17 “WRAP TRAPS” Issues to Consider  Definition of project site cannot be overlooked and must consider how the project will be executed Laydown Area Incident

18 “WRAP TRAPS” Issues to Consider  AI and indemnity issues still a factor with wraps  There may be coverage for unenrolled subs  Need to balance whether to enroll off-site subs Unenrolled Subcontractor

19 “WRAP TRAPS” Damage from Warranty Work (OCIP) GC Developer (Sponsor) Electrical Sub HOA/ Unit Owner PD Suit against Electrical Sub

20 “WRAP TRAPS” Damage From Warranty Work 10/1/05 11/30/05 5/30/06 Electrical Sub works on floors /1/05 Electrical Sub works on floors /22/06 HOA/Unit Owner/Developer sue Electrical Sub for PD 1/15/06 Electrical Sub warranty work damages sprinkler- PD: floors /7/05 Unit Owner on floor 9 requires electrical warranty work

21 “WRAP TRAPS” Issues to Consider  The structure of wrap-up policies vs. traditional policies can affect coverage Damage from Warranty Work

22 “WRAP TRAPS” “Adequate” Limits  Defense within limits  Limits shared by all insureds; possibly multiple projects

23 “WRAP TRAPS” Exclusions  Read exclusions carefully (including endorsements)  Avoid cross-liability exclusion  Avoid mold exclusion


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