The ‘Wrap Gap’ Program

Filling the gaps in Wrap-Ups

As the market has moved away from the traditional practice policies and towards Wrap-Ups, the grey areas of Wrap coverage have come to light. It is often thought that Wrap-Ups are designed to cover every exposure, both on and off the job site. Unfortunately this is often not the case and buyers are becoming increasingly concerned about the number of grey areas and gaps that exist in the Wrap-Up product.

Jansen & Hastings have developed a program which aims to help subcontractors to ‘sleep easy’ – a policy which provides excess coverage over scheduled Wrap-Ups (including expired policies) and which plug some of the coverage holes.

Excess & Contingent Wrap-Up coverage

In today’s construction market, for subcontractors to get onto a jobsite they often have to be enrolled under the Wrap-Up, should there be one. With most standard practice policies containing Wrap-Up exclusions, there is no other option, either enrol or lose the job.

In many cases the subcontractor is concerned that the Wrap-Ups aggregate limits will be eroded or that the Wrap carrier may become insolvent, the Excess & Contingent Wrap-Up endorsement will provide cover to allay these fears. Excess coverage can be provided over scheduled current and prior Wrap-Up projects should aggregate limits be eroded, and contingent coverage for financial failure/insolvency of the original Wrap-Up carrier (carriers must be A rated at the time of binding/scheduling).

Wrap-Up related offsite and repair / remodelling coverage

One of the most obvious coverage gaps is for subcontractors who have to prefabricate materials which are intended for Wrap-Ups, offsite. For example, a framing subcontractor who prefabricates trusses offsite before taking the finished product to the jobsite. Under a standard Wrap-Up policy or the subcontractors practice policy, which would usually contain a Wrap-Up exclusion, there would be no coverage for this work or the off site premises exposure.

Also, subcontractors who have to re-visit a finished job site, which was once covered by a Wrap-Up, will often be uninsured because the work is being performed after the units have closed escrow or are substantially complete. If the subcontractor needs to perform repair / remodelling work on the finished job site, their practice policy will usually exclude this work and the Wrap-Up policy will not respond either.

The Wrap-Up related offsite and repair / remodelling coverage provides for Wrap-Up, project related offsite work, including infrastructure work on adjacent or nearby land. It also provides coverage for repair / remodelling work performed on projects insured under a consolidated Wrap-Up insurance program.

How the ‘Wrap Gap’ works.

The above coverage enhancements will be added to the standard JHI claims made GL policy.

The Excess & Contingent coverage will be “flat” rated and will be based on the revenues attributable to the subcontractors work on the Wrap-Ups. The repair / remodelling work, will be adjusted based on the receipts generated from this work.

If the insured wishes to non renew their Wrap Gap policy, a pre priced Extended Reporting Period (ERP) is available. This can be triggered for a cost of 250%, 200% or 150% of the M&D premium or the audited premium, whichever is higher. The ERP does not apply to the financial failure / insolvency of the original Wrap carrier.

Summary of the ‘Wrap Gap’

• $25,000 minimum premium.
• Limits Up to 1/2/2
• Minimum trailing SIR $10,000.
• Coverage provided for the individual subcontractors work only.
• Excess & Contingent coverage available for past and present scheduled Wrap-Up projects. Scheduled projects must remain in full force and effect or are so deemed. Any excess policies purchased for a specified project, but not scheduled, will be deemed as scheduled.
• Offsite coverage provided where the Wrap-Up does not cover this work. This provision is only available if the subcontractor is enrolled within the Wrap-Up prior to the performance of their work.
• Repair / remodelling coverage for subcontractors revisiting a Wrap-Up project.
• Excess & Contingent coverage will be rated “flat”, based on the revenues arising from their work on the Wrap-Up project. Repair / remodelling work on Wrap-Up projects, will be adjusted based on the receipts attributable to this work.
• ISO Claims Made form.
• Extended Reporting Period (ERP) of 10 years available at 250%, 200% 150% (depending on the size of the M&D premium). Note: ERP is not available for financial failure or insolvency of the Wrap-Up carrier.
• Policies can be structured to include practice operations as well as Wrap Gap coverage’s. Alternatively, stand alone premises cover or Wrap Gap policies can be provided.
• Coverage provided is no wider than the claims made policy issued. Policy does not follow form of the Wrap projects.
• Under the Excess & Contingent endorsement, subcontractors must be enrolled within the original Wrap-Up within 90 days of the project start date

Information needed to quote

• JHI 1 page Wrap Gap Application.
• 5 years currently valued loss runs for the subcontractor.