Objectives Understand ideal coverage under wrap-ups

1. “WRAP TRAPS” 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)

2. “WRAP TRAPS” Corporate Insurance Wrap-up Insurance Coverage Gap Avoiding Gaps in Coverage Liability

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

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

7. “WRAP TRAPS” Corporate CGL Policy • 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

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

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

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

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

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

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

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

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

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

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

18. “WRAP TRAPS” Unenrolled Subcontractor • 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

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

20. “WRAP TRAPS” HOA/Unit Owner/Developer sue Electrical Sub for PD 2/22/06 Electrical Sub warranty work damages sprinkler- PD: floors 1-9 1/15/06 Unit Owner on floor 9 requires electrical warranty work 12/7/05 Damage From Warranty Work 5/30/06 Electrical Sub works on floors 11-40 12/1/05 11/30/05 Electrical Sub works on floors 1-10 10/1/05

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

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