SDV Insights

Overbroad Wrap Exclusion Can Hamper Additional Insured Risk Transfer

SDV Partner Gregory Podolak recently published “Overbroad Wrap Exclusion Can Hamper Additional Insured Risk Transfer,” another Expert Commentary article for IRMI:

As wrap use has grown, so has the use of “wrap” exclusions. Wrap exclusions are added via endorsement to commercial general liability (CGL) policies and exclude (or, in some cases, modify) coverage for damages related to project work insured by a wrap. The intent is to avoid duplicative coverages—the idea being that if the subcontractor is insured by a wrap, its insurer under its corporate program will want to avoid providing overlapping coverage for that project.

While the existence of wrap exclusions on enrolled subcontractors’ policies is usually of no moment to the owner and general contractor, an overly broad wrap exclusion can fundamentally frustrate the intended risk transfer. Depending on language usage and court interpretation, its existence could prevent an upstream party from accessing the additional insured coverage on the subcontractor’s policy without being able to rely on the wrap insurance.

Click here to read the entire article.

The author would like to acknowledge and thank coauthor Grace V. Hebbel for her contributions to this commentary.


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