The ISO Modifies A Wrap-up Exclusion
A Revision to Commercial General Liability Coverage
On December 1, 2019, The Insurance Services Office, Inc. (ISO) issued several new and revised endorsements to be used with Commercial General Liability (CGL) coverage forms. The new/revised ISO forms include several notable changes. ISO addressed a risk transfer issue when contractors or other parties are enrolled in wrap-up insurance programs. Most CGL policies contain the following ISO form (ISO CG 21 54 01 96) or equivalent:
This insurance does not apply to “bodily injury” or “property damage” arising out of either your ongoing operations or operations included within the “products-completed operations hazard” at the location described in the schedule of this endorsement, as a consolidated (wrap-up) insurance program has been provided by the prime contractor/project manager or owner of the construction project in which you are involved.
This exclusion created an obstacle to parties attempting to transfer risk to trades onsite or those providing offsite services, who were not enrolled in the wrap-up. For example, where an unenrolled trade caused a loss, the general contractor, owner, etc’s. intent is to transfer risk via the unenrolled trade’s additional insured coverage. However, in many jurisdictions, courts interpreted the above language to exclude additional insured coverage to an owner, contractor, etc., simply because there was a wrap-up program on a project; even if the named insured was not enrolled in the wrap-up. The general contractor, owner, etc’s. tender of defense as an additional insured was denied.
ISO has now resolved this risk transfer problem by issuing endorsement CG 21 54 12 19, which states in part that the wrap-up exclusion applies only if you (the named insured) are enrolled in the wrap-up program with respect to bodily injury and property damage. This language closes a loophole in the risk transfer when working with unenrolled trades.
We recommend any owner, contractor, project manager involved in an OCIP/CCIP program require in their contracts all unenrolled trades or parties providing offsite work, add this endorsement (CG 21 54 12 19) to their CGL policy to fix the gap in insurance coverage, to fulfill the parties’ risk transfer intentions.
Contact a member of the ‘A’ Team for more information.
- Wrap-Up vs. Traditional Insurance
- 6 Tips to Remember When Enrolling in a Wrap-Up
- Keys to Implementing a Successful Wrap-Up
- Wrap-Up Overview
- New Additional Insured Endorsements: Automatic Status for Completed Operations
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