Insurance Journal Forums

Seeking some insight specific to the new Residential construction market for projects in California....

I have a retailer who is telling me that American Safety and Evanston allow coverage for off-site work covered in a Wrap. She further advises they allow issuance of certificates of insurance including an Additional Insured, Primary Wording and Waiver of Subrogation endorsments. Finally, she says she has it in writing from her underwriters.

I am not directly appointed with either market, so cannot review the forms myself, but I must say, I don't believe her. Would someone advise if they have knowledge of this?

Happy Valentine's Day.

I issue certificates most every day for insureds who are included in one wrap-up project or another. You have to keep in mind the wrap-up policy only covers the insured while they are ON THE JOBSITE. In this day and age, most home builders believe (well, their attorneys do) that they could be at "risk" from claims eminating from the contractor or subcontractors off site operations....workers injury traveling TO or FROM the jobsite, property damage while off the jobsite due to an operation of the insured "remotely related" to the job. Also, the automobile is normally NOT included in the wrap up insurance, generally only the GL, WC, Builders Risk/Property and Umbrella. When issuing a certificate for an insured who is included in a wrap up, we include the additional insured, waivers, etc. (if their carrier allows) on the certificate; however, the last line of the certificate always reads: All insurance evidenced herein, with the exception of Automobile, is for off-site coverage only.
So far, it works for us, for the home builder, for the insured and the carrier.
I am in Virginia; however, I would imagine, it would be the same everywhere else. If you are unsure you can always ask to review the wrap up insurance documents which are available to your insured.
Also, you should also advise your insured to make sure he/she receives confirmation that they are in fact "enrolled" in the wrap-up. Lots of paper work so they should know but we recommend written confirmation.

I may not understand your question, because most GLs cover off-site exposures for Wraps. The Wrap provides coverage for only on-site exposures, so every contractor working on the project must have their own GL to provide the off-site exposure coverage. And, it's standard practice to add the Owner and General Contractor/Project Manager as Additional Insured with the waiver and primary/non contributory wording.

I'm an agent in Michigan, so not sure if this is much different elsewhere.

I cannot comment on Evanston but I can assure you that American Safety does not allow you provide an AI endorsement for a project covered under a wrap policy for "off site" exposures. I do not know of any carrier writing residential trade contractors in CA that is. I have several large framers and general engineering contractors with American Safety. This insurance requirement by the builder is easily worked around with a phone call or letter to their insurance compliance.

The carriers and builders are really specific in CA due to the high risk of construction defect claims. It is rather odd. I have trade contractors that do work in CA and NV and the same national builder will have different requirements in each state. They are very tight in CA but in NV they have basic requirements and will accept RRG's. Carriers will also do things in NV they will not do in CA.

I am a broker in Southern California, and one of my largest clients is insured with American Safety. This client, as well as others I have, perform residential construction and some of the work is covered by WRAPs. This issue comes up ALL of the time, and the carriers will NOT allow us to issue A/Is, Waivers, etc... for the "off-site" exposures." The American Safety policy excludes WRAP/OCIP work. The carrier does NOT want to get involved. I have asked the wholesalers I work with repeatedly to ask the carrier for an exception, and EVERY time the answer is NO.

In addition, the client does NOT include the revenue for this job when reporting their audit numbers. The carrier is not getting any premium for the exposure; why in the world would they be OK with the issuance of an A/I for the WRAP. The problem is that the brokers putting together the WRAPs, and the carriers as well, do not include the "off-site" exposures" You should know what work will be performed off-site and have the policy worded accordingly; this will eliminate the need for the A/I on the sub-contractors CGL policy (which they can not get anyway).

American Safety has defense inside limits on their policies for residential contractors; why do I want to potentially impair my client's limits to defend the GC? And yes, I know that retail brokers oblige their clients all of the time; I am just glad that the E&O claim will be on their policy and not mine. Alan.

I don't agree with the insured having to name the GC as additional insured for "off site" exposures; however, if the GC requests/requires it, my job is to advise the client and recommend he/she attempt to negotiate the deletion of that specific requirement. If the negotiations are unsuccessful and the insured is still required to add the GC as Additional Insured on the GL & Umbrella, and if the insurer agrees (knowing the payroll/sales from the wrap-up are excluded) then that's on them and not the agent who prepares the certificate of insurance that was approved by the underwriter.

The off site issue is only an issue when the insured has a product that they prepare or fabricate on a site away from the wrap project site. Usually that premises is the insured's shop. When they fab a product in their shop that they install in a wrap, the AI should only be of the ongoing ops variety since the product will be installed on the wrap site and that installation + the product integrity will be covered by the wrap.

If the wrap administrator will accept the ongoing ops AI form [10/93 variety] as part of the cert and, as well, copies of the insured's GL residential exclusion and wrap exclusion, its a no brainer for the insured's GL carrier. When couched this way and ok'd by the administrator the underwriter has no reason to be fearful. Most wrap admins these days, even here in CA and even Aon, finally understand what to expect and what to require.

As to American Safety allowing an additional insured for "off premises" work, I have been told both yes and no on several different occasions. I have over 30 customers with American Safety, all who perform residential contruction in CA. As far as I know there has not been a court decision on the issue of "off premises". I think it is the insurance companies intent to exclude all work pertaining to a wrap including bodily injury and property damage that occurs due to "off premises work". American Safety's endorsement goes as far as to say coverage is exlcuded if a WRAP EVER Existed on a project. Many agents talk about the insured negotiating themselves out of joining the WRAP and working under their existing insurance. This is fine in most other cases but you would need to get something from American Safety in writing excluding the WRAP exclusion for a particular job. The wording of "ever existed" does bother me along with many other things "prior works" etc. Lee3632005 you should be demanding defense outside I havent had a problem getting it for my customers with American Safety.

My sincere thanks to all of you for your very helpful comments.

Have a wonderful rest of your day!