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 1-10 12/1/05 Electrical Sub works on floors 11-40 2/22/06 HOA/Unit Owner/Developer sue Electrical Sub for PD 1/15/06 Electrical Sub warranty work damages sprinkler- PD: floors 1-9 12/7/05 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