The Unique Risk of Construction Wrap-up Policies

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Agenda

• Presenters• History of Wrap-up Policies • CIP Terms & Types• Differences: General vs. Wrap-up Policies• Advantages & Disadvantages• Discussion Points• Ethical Considerations

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Presenters

• Brian Trusky– Vice President, Loss Prevention - Moss &

Associates• Thomas Martyn, Esq.

– Law offices of Martyn, Toher, Martyn (LM)• Thomas McBride, Esq.

– Partner, Delaney & O’Brien

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Market History of Wrap-up Policies

• Origination of Policy Type– Why existing insurance products didn’t fit need– Period of use

• Areas of Historic Use– Commercial Developers– Government Projects– Large Public Projects

• Ex:

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CIP Terms & Types

• Controlled Insurance Program (CIP)– Centralized and controlled insurance and risk program– Sponsored by contractor or project owner– Covers owner, and participating contractors and subs– Maintains overall responsibility for worksite& safety– Claim management & involvement

• CIP Sponsor– The party who purchases the Wrap Up policy

• CCIP– Contractor is the sponsor

• OCIP – Owner is the sponsor

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CIP Terms & Types

• Maintenance CIP– Ongoing contract work for ongoing facilities– CIP remains in place– Contracted work added as it occurs

• Rolling CIP– Ongoing CIP– Insure multiple construction projects

• Other Types– Residential, Environmental, GL only, International…

CGLIntended for insured’s

entire operation

Named insured is our client

Policy forms are largely the same

1 year policy

CIPSite specific coverage

Enrolled subs also become our insured’s

Endorsement unique/ provides Tail coverage

Multi year policy

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Why CIP Over Traditional CGL?

CIP• Sponsor buys insurance for

contractors• One broker and one carrier• Uniform coverage and limits• One rate• Uniform safety approach• Select litigation and claim

dashboards can be mitigated • Better Monitoring of

Settlement/Closeout

CGL• Insured buys insurance from

contractors• Different brokers and

carriers• Various coverage and limits

among all parties• Various rates• Various safety approaches• Litigation and claim

vulnerabilities

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Project Close-Out

• Close-Out vs. Termination• Factor: High Unemployment rate• (need additional bullets)

Removes litigation efforts for:

- Proving/disproving contractual defense

- Indemnification claims

Only one defense office handling the defense of plaintiff’s claim

Provides for unified and more efficient

approach to the defense and litigation

strategy

Securing the cooperation of multiple sub-contractors

- May no longer have working ties with the owner and/or general contractor

No co-defendant disagreement regarding- Settlement- Arbitrations - Mediations

Issues that can arise when contractors do not unite/agree - GL not named in suit, but is

paying legal costs- Sub-contractor disagreement re:

Strategy- Claims needs to separate

handling

Cuts down significantly on time spent on litigation - Co-defendants discovery

demands - Interrogatories - Depositions - Contractual indemnification

claims

Only one office to coordinate multiple responses to interrogatories, depositions, discovery responses

Trials- Avoids Jury Sympathy

Single plaintiff’s attorney up against multiple defense attorneys

- Avoids Jury Confusion Multiple defendants, multiple positions, opinions and conclusions

Trials- Jury awareness that

insurance is involved- Jury confusion about

attorneys role in representing multiple parties

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Ethical Conflicts/Considerations

• How to identify the client– Areas of potential GC/Sub conflict of interest

• Understand claims handling and reporting needs of case

• Do you need separate handling of case? – Different Claims handler– Different attorneys

• Addressing cross-claim issues• Why a unified defense might not be possible• Terminating CIP Program

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Questions?