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Program design

Exclusions and excluded parties

Every wrap-up leaves people out. The list looks like boilerplate until somebody on it causes a loss and the program does not respond, at which point it turns out to have been the most important page in the document.

Who counts as a supplier

One of four program design decisions.

The short version

The list is not boilerplate

A typical wrap excludes suppliers who only deliver material, haulers and truckers, design professionals, hazardous material abatement contractors, and anybody whose work falls outside the covered location.

The one that causes the most trouble is the supplier definition, because the line between delivering a product and installing it is thinner on site than it looks in the contract.

Everybody on the exclusion list still has to carry their own insurance and still has to give you a certificate. Excluding somebody from the wrap does not excuse them from being insured.

On this page
  1. Who normally gets left out
  2. Who counts as a supplier
  3. Certificates do not stop
  4. Coverage exclusions, as distinct from excluded parties
  5. Common questions
What we place, and where
Programs
Owner-controlled (OCIP) and contractor-controlled (CCIP) wrap-ups, rolling wrap-ups, builders risk, and project-specific or practice liability where a wrap is not the right structure.
Project types
Multifamily and mixed-use, condominium and for-sale residential, podium and wood-frame, commercial, tenant improvement, and industrial.
Where
Licensed in all 50 states. Deepest bench in California, where the wrap-up statutes are covered in detail on this site.
Project size
No minimum to ask. A wrap typically starts to pay for itself around $25 million in hard construction value. Smaller projects are placed on conventional structures instead.
Who we work with
Owners, developers, general contractors, and subcontractors buying practice coverage for the off-site gap.
Who you deal with
Cary W. White, producer. ISU Insurance Services of San Francisco, CA Lic. #0778092. Cary W. White, CA Lic. #0B77854. We place coverage; we are not the carrier.

The list

Who normally gets left out

No wrap-up enrolls everybody. The excluded parties list is negotiated at placement and it is usually treated as boilerplate, which is a mistake, because it is the list that decides where the uninsured gaps sit.

Commonly excluded parties and why
ExcludedReasonWhat they need instead
Material suppliers and vendors who only deliverNo operations at the site beyond deliveryTheir own general liability, products and completed operations
Haulers, truckers and delivery contractorsExposure is automobile, which sits outside the wrapAutomobile liability at adequate limits
Design professionalsExposure is professional, not general liabilityProfessional liability, project-specific or practice
Hazardous material and abatement contractorsPollution exposure most wraps excludeContractors pollution liability
Demolition and blasting, on some programsSeverity, and often a separate marketTheir own coverage, sometimes a separate placement
Utility and agency crewsNot under the sponsor's contractTheir own programs and the relevant agreements
Anyone working outside the covered locationThe program is a site policyTheir own practice policy. See covered locations

Every one of these still has to be insured, and somebody on the project still has to collect and read the certificate. Excluding a party from the wrap removes it from the program. It does not remove it from the site.

The hard one

Who counts as a supplier

The supplier exclusion causes more trouble than the rest of the list combined, because the line between delivering a product and performing work is much thinner on site than it is in the contract.

A company that drops pallets of material at the gate is clearly a supplier. A company that delivers a product and installs it is clearly a subcontractor. In between sits most of the modern supply chain:

Each of those is arguable, and the argument happens after somebody is hurt or something is damaged. The practical approach is to decide it in advance rather than by category. Where a party performs any physical operation at the site beyond unloading, treat it as a candidate for enrollment and get the question answered by the underwriter in writing before the work starts.

The test that works on site

Not "do they sell us something?" but "do they do anything at the site other than unload?" If the answer is yes, it is a question for the program administrator, not an assumption.

What you still collect

Certificates do not stop

A common and expensive belief about wrap-ups is that they end the certificate chase. They narrow it. Everything on the exclusion list still has to produce evidence of insurance, and so does every enrolled subcontractor for the coverage the wrap does not provide: automobile, their off-site work, professional and pollution exposure where relevant, and their own equipment.

Worth saying plainly, because it applies on wrap and non-wrap projects alike: a certificate of insurance confirms that a policy existed on the day the certificate was issued. It does not confirm that the policy covers the work being done, that the additional insured endorsement says what the contract required, that the limits are what the certificate claims after other claims have eroded them, or that the policy is still in force today.

The verification that matters is reading the endorsements, not filing the certificate. On an excluded party whose work can hurt somebody, that is worth doing properly, because the wrap is not standing behind it.

Beyond people

Coverage exclusions, as distinct from excluded parties

The excluded parties list says who is not in the program. A separate set of exclusions says what the program does not cover for the people who are in it. Both matter and they get confused.

Common coverage exclusions and restrictions on a wrap:

And then sublimits, which behave like exclusions once a loss passes them. A ten million dollar program with a one million dollar sublimit on a given exposure is a one million dollar program on the day that exposure causes the loss. Reading a proposal for sublimits against the exposures this particular project has is one of the more useful hours anyone spends on it.

Questions

Common questions

Who is normally excluded from a wrap-up?

Material suppliers and vendors who only deliver, haulers and truckers, design professionals, hazardous material and abatement contractors, often demolition and blasting, utility and agency crews, and anyone working outside the covered location. The list is negotiated at placement and should be checked against the actual trade list rather than accepted as boilerplate.

Where is the line between a supplier and a subcontractor?

Thinner than it looks. A company that drops pallets at the gate is a supplier. A company that delivers and installs is a subcontractor. Ready-mix placed from a chute, windows set by a manufacturer's technician, precast rigged by the supplier's crew and equipment commissioned by its vendor all sit in between. The workable test is whether the party does anything at the site beyond unloading, and if so, to get the enrollment question answered by the underwriter in writing before the work starts.

Do excluded parties still need to provide certificates?

Yes, all of them. Excluding a party from the program removes it from the wrap, not from the site. Their own insurance is the only thing standing behind their work, which makes reading their endorsements more important rather than less.

Does a wrap-up end the certificate chase?

No, it narrows it. Excluded parties still need certificates, and enrolled subcontractors still need their own coverage for automobile, off-site work, professional and pollution exposure and their own equipment. A certificate also only confirms that a policy existed when it was issued, not that it covers the work, that the endorsement says what the contract required, or that it is still in force.

Are design professionals covered by the wrap?

Generally not. Their exposure is professional liability rather than general liability, and it is normally handled by their own practice policy or by a project-specific professional placement. Delegated design performed by trades is worth checking separately, because it can fall into the professional services exclusion even where the trade itself is enrolled.

What is the difference between an exclusion and a sublimit?

In practice, less than it sounds. An exclusion removes the exposure. A sublimit caps it. A ten million dollar program with a one million dollar sublimit on a particular exposure behaves like a one million dollar program on the day that exposure causes the loss, so sublimits should be read against the exposures the project actually has.

Next

Where to go from here

The other three design decisions.

One Policy term and the tail The construction term and the completed operations years. Two Covered locations Where the boundary sits and what happens off site. Three Multiple projects One program across several jobs.

Who you would be working with

Cary W. White

Cary W. White, Managing Director, ISU Insurance Services of San Francisco

Managing Director · ISU Insurance Services of San Francisco

Cary handles the wrap-up placements here. He has spent 38 years in construction insurance. The first ten were on the carrier side, underwriting builders’ risk and complex property exposures. The 28 since have been in retail brokerage, advising residential developers, general contractors and other construction clients on project-specific and annual programs.

He is also one of the original authors of the project liability application that much of the industry still uses to submit wrap-ups to carriers. In practice that means he knows what each question is actually asking for, and where a thin answer will cost you at quote.

cwhite@isusf.com · 415-613-5589

Pricing

Price your project

Tell us about the project and we will give you a straight answer on whether a wrap makes sense for it. If it does not, we will say so, and then we will price the structure that does. That answer is worth more to you than a placement that costs more than it saves. There is no project minimum to ask. This goes straight to Cary White, who handles wrap-up placements for our construction clients.

The project
Structure and exposure
You

We will come back with a price range and what else underwriters will need. No obligation, and we will tell you if a wrap is the wrong answer.