Study 7 - Wrap-Up Liability Policy Flashcards
1
Q
Wrap-Up Liability Policy
A
- One liability policy insuring the legal liability of all the involved interests of a large construction project
- Parties of interest include: the owner, contractor, subcontractors, architects, engineers, and their consultants
- Coverage is generally arranged by the project owner or the general contractor
2
Q
Difference-in-Conditions insurance
A
1) A property policy insuring “all risk” of physical loss or damage, excluding fire and extended coverage perils
2) A term used to describe liability coverage needed by wrap-up program enrollees to protect them when either the wrap-up ends or the wrap-up aggregate limit is exhausted
3
Q
Difference-in-Limits insurance
A
A clause or provision contained in a difference-in-conditions policy that covers or reimburses any additional expenses greater than the limit set in the standard policy
4
Q
3 Advantages of the Wrap-Up Liability Policy
A
- There is one policy for all contractors, subcontractors, and owners involved in a construction project
- Allows the owner or developer to deal with a single source for insurable expenses
- In the event of a loss, depending on circumstances, only one adjuster and one lawyer will be involved to deal with any claims and defend all insured parties - There is possible premium savings
- Only one insurer needs to investigate a claim, thus reducing expenses
- A wrap-up policy will cost less than the collective policies that would have been required by each contractor, subcontractor, etc. - There are separate aggregate amounts for completed operations coverage
- The comp ops covg under the CGL policy may contain an annual aggregate limit
- The wrap-up liability policy contains a separate comp ops aggregate for the specific project insured
- No other previously completed projects that caused a loss would exhaust the aggregate limit
5
Q
Wrap-up Liability wording amendments
A
- Named insured - the named insured would be amended to include all contractors and subcontractors of the owner
- Operations - The description of operations would state “All operations with respect to the construction of the project”
- Limit of liability - The limits of insurance would be dedicated to the specific project mentioned. Not unusual for the policy to also have an annual aggregate limit with respect to the comp ops exposure
6
Q
Underwriting information required
A
- Detailed applications to closely examine potential insureds
- Common for insurers who already write the CGL and other policies to write the wrap-up. The need to be familiar with a contractor’s operation often discourages insurers who are not already involved with the risk
- Information on any underlying coverage that will be in effect
- Qualifications and expertise of the policyholder
- Any previous claims must be disclosed
7
Q
Basic Information Required
A
- Name of the project
- Description of the project
- Location of the project
- Period of construction
- Professional fees
- Contract price
- Copies of underlying policies in effect for the project
8
Q
Information about methods of constructions and the type of construction will be gathered
A
- Type of foundation
- Type of construction materials to be used
- Building height (is it a high-rise project?)
- Number of floors below and above grade
- Whether the structure is attached to an existing structure
- Type of construction method to be applied
- Whether the policyholder will use the latest scientific and technical know-how
- Type of scaffolding to be used
9
Q
Other U/W considerations
A
- Details concerning loss control and the exposures associated with the surrounding environment must be reviewed
- Is the area built-up?
- What utilities might pose a liability hazard?
- Would falling parts damage existing buildings in the neighbourhood?
- Traffic issues may pose a significant liability exposure, is the area open to public traffic?
- Polluting elements brought onto the site may also affect the rate
- Site security must be examined
