Wrap-Up Coverage for the Claims Professional

Transcription

1 Wrap-Up Coverage for the Claims Professional by Tracy Alan Saxe Edwin L. Doernberger Jeremiah M. Welch April 6, 2010

2 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)

3 Corporate Insurance Program Owner Workers Comp Coverage CGL Coverage Employers Liability Coverage General Contractor Workers Comp Coverage CGL Coverage Employers Liability Coverage Subcontractors Owner is AI Workers Comp Coverage CGL Coverage Employers Liability Coverage Owner is AI GC is AI

4 Wrap-Up Insurance Program Insurer CGL/Excess Workers Comp Employers Liability Owner General Contractor Subcontractors Owner General Contractor Subcontractors Owner General Contractor Subcontractors

5 Wrap-Up Goals Save premium dollars Improve insurance coverage Improve job site safety Improve claims outcome Reduce defense costs Ability to employ small contractors

6 Traditional Insurance Program: Claims for Bodily Injury Bodily Injury Claims by Subcontractor s Employee Lawsuit for indemnity pursuant to indemnity agreement in Subcontracts via either (1) separate lawsuit; or (2) fourth party claim in original lawsuit brought by subcontractors employees Owner Lawsuit for indemnity per General Contract via either (1) separate lawsuit; or (2) third party claim to lawsuit by Association General Contractor Tenders defense of itself and Owner to Subcontractors pursuant to indemnity agreement in Subcontracts Subcontractors A & B Tenders defense to GC pursuant to indemnity agreement in General Contract GC tenders its defense to its CGL carrier for contractual liability coverage Tenders its defense to Subcontractors CGL policies as AI on Subcontracts Subcontractors tender their defense to their CGL carriers for contractual liability coverage Tenders defense to GC s CGL insurer pursuant to AI endorsement on GC s CGL policy, as required by General Contract GC s CGL Insurer Tenders defense to Subcontractors CGL insurers pursuant to AI endorsements on Subcontractors CGL policies as required by Subcontracts between General Contractor and Subcontractors Claims that GC s policy is excess to Subcontractors policies Subcontractors CGL Insurers

7 Wrap-Up Program: Claims for Bodily Injury Bodily Injury Claim by Subcontractor s Employee Owner General Contractor Non Employing Subcontractor Tender defense to one Wrap up insurer who defends suit and pays claim

8 Wrap-Up Advantages Joint defense between Owner & G.C. No cross-claims between Owner & G.C. No cross-claim against Subcontractor No indemnification issues No additional insured issues

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

10 Wrap Coverage Analysis Sub Contract Prime Contract Wrap Manual Policy

11 Coverage Issues What is covered? How long is it covered? Who is covered? How much coverage? Gaps and other issues

12 What is Covered: On-site/Off-site Off-site Contractor s Office Storage Storage Area Area Project Address On-site Staging Facility Staging Facility Lay Lay Down Down Area Area Lay Down Area

13 What is Covered: Wrap-Up Manual CCIP coverages shall apply only to those operations of each enrolled party performed at the project site in connection with the work and only to enrolled parties that are eligible for the CCIP, even if erroneously enrolled in the CCIP.

14 What is Covered: Lay Down Area Incident Sub (Employer) Lay Down Area Employee injured moving material Project Address

15 What is Covered: Lay Down Area Incident Issues to Consider Definition of project site cannot be overlooked and must consider how the project will be executed

16 How Long is it Covered: Completed Operations Project Period Completed Operations Wrap-up Insurance Policy Years 1-3 One Policy/Fixed Rate 3-Year C/O Policy Year 6 Policy Year 13 Corporate Insurance Policy Policy Year Policy Year Year Multiple Policies/Various Rates Policy Year 13 Corporate insurance policy covers damages for that policy year only

17 How Long is it Covered The Extended Completed Operations Period will commence when that portion of the project is put to its intended use

18 How Long is it Covered: Ending Too Early Owner doesn t renew Project Start Project Complete

19 Gaps and Other Issues: Corporate CGL Exclusion # 1 This insurance does not apply to any claim, suit, demand or loss that alleges bodily injury, property damage, or personal and advertising injury that in any way, in whole or in part, arises out of, relates to or results from any entity, project or location that is or was insured, designated, scheduled or covered under a wrap up or any consolidated insurance program.

20 Gaps and Other Issues: Corporate CGL Exclusion # 1 This exclusion applies regardless of whether: Such wrap-up or any consolidated insurance program is expired, cancelled, terminated or nullified; The limits of liability of such wrap-up or any consolidated insurance program are inadequate, impaired, reduced or exhausted; or Insurance coverage under such wrap-up or any consolidated insurance program is excluded or otherwise not provided.

21 Gaps and Other Issues: Completed Operations Project Period Completed Operations Wrap-up Insurance Policy Years 1-3 One Policy/Fixed Rate 3-Year C/O Policy Year 6 Corporate Insurance Policy Policy Year Policy Year Year Multiple Policies/Various Rates Policy Year 13 Corporate insurance will not cover any claim in year 3 through year 13

22 Gaps and Other Issues: Corporate CGL Exclusion # 2 This insurance excludes any claim for bodily injury or property damage arising out of either your 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

23 Gaps and Other Issues: Completed Operations Project Period Completed Operations Wrap-up Insurance Policy Years 1-3 One Policy/Fixed Rate 3-Year C/O Policy Year 6 Corporate Insurance Policy Policy Year Policy Year Year Multiple Policies/Various Rates Policy Year 13 Corporate insurance may cover completed operations period from year 3 through year 13

24 Gaps and Other Issues: Corporate CGL Excess This insurance is excess over: Any primary or excess insurance available to you through a Consolidated (Wrap-Up) Insurance Program.

25 Gaps and Other Issues: Completed Operations Project Period Completed Operations Wrap-up Insurance Policy Years 1-3 One Policy/Fixed Rate 3-Year C/O Policy Year 6 Corporate Insurance Policy Policy Year Policy Year Year Multiple Policies/Various Rates Policy Year 13 Corporate insurance will cover any claims in year 3 through year 13 along with any excess coverage during construction

26 How Much Coverage Shared limits

27 Defense Issues Cross-suit exclusion Joint defense counsel

28 Limits and Deductibles Substantial Completion Electrical Sub Performs Warranty Work PD Caused By Sub s Warranty Work Who Pays Deductible/SIR?

29 How Much Coverage: Horizontal Exhaustion New York policies not controlled by trade contracts California wrap policies not controlled by trade contracts/ wrap documents Enrolled parties must endorse around horizontal exhaustion

30 Who is Covered? CCIP General Contractor/CM All subcontractors of any tier, for whom the First Named Insured or an Additional Named Insured has agreed by contract to provide General Liability coverage under the Contractor Controlled Insurance Program, excluding vendors, suppliers, off-site fabricators, material dealers and others who merely make deliveries to or from the Project Site(s).

31 Who is Covered? OCIP The Owner All contractors and/or subcontractors/consultants and/or subconsultants for whom the owner or owner s agent are responsible to arrange insurance to the extent of their respective rights and interests. Coverage afforded by this policy is automatically extended to contractors, who are issued a Workers Compensation policy under this Owner Controlled Insurance Program (OCIP). All other contractors not issued a Workers Compensation policy must be endorsed onto the policy to be afforded coverage under this policy. Named Insured does not include vendors, installers, truck persons, delivery persons, concrete/asphalt haulers, and/or contractors who do not have on-site dedicated payroll.

32 Who is Covered: Unenrolled Subcontractor (CCIP) GC (Sponsor) Suit for indemnification and AI Off-site Fabricator Prime Sub (Unenrolled) On-site Erector Sub-sub (Enrolled) Suit for wrongful death Erector s employee dies from injuries on-site

33 Who is Covered: 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

34 Who is Covered? Leased Employees Additional Insureds

35 Thank you! Tracy Alan Saxe Edwin L. Doernberger Jeremiah M. Welch SAXE DOERNBERGER & VITA, P.C.