The general contractor on a New Orleans condominium construction project obtained a Contractor Controlled Insurance Program/CCIP policy or "Wrap-Up" policy for the job.
An accident occurred on the job when a construction elevator/hoist fell, injuring several workers. The elevator/hoist was provided by a subcontractor, pursuant to a rental agreement and related subcontract with the general contractor. Contained within the subcontract was a provision which states that the general contractor "has arranged for the Project to be insured under a controlled insurance program (the "CCIP" or "WrapUp"),” and that the CCIP shall provide "commercial general liability insurance and excess liability insurance, in connection with the performance of the Work at the Project site."
A third-party administrator for the wrap-up policy had been in communication with the subcontractor prior to the commencement of the work, “specifically advising that insurance coverage was not automatic” and providing the subcontractor with an enrollment form for the CCIP. Ultimately, the subcontractor “declined to comply with the request,” stating that the subcontractor would "not participate in paying any wrap insurance premiums" – because the subcontractor had its own insurance.
After commencing work on the project, the subcontractor changed its mind and sent an enrollment form to the wrap-up administrator. At that point, the GC declined the enrollment, having already decided that the sub would be excluded from the CCIP coverage. The subcontractor was informed accordingly.
Mired in all of this was the subcontractor’s CGL insurer, which had in its policy a “wrap-up exclusion” – an exclusion of coverage when a project was subject to a CCIP. Seeking to be dismissed from claims by the injured plaintiffs, the sub’s CGL carrier filed a motion for summary judgment asserting in part that “the Wrap-Up Exclusion does not require [the sub] to be actually enrolled in the CCIP policy in order for the exclusion to apply.” The trial court granted summary judgment, and an appeal ensued.
The Louisiana Fourth Circuit Court of Appeal affirmed the trial court ruling in favor of the CGL’s insurer: “Notwithstanding the reason why [the sub) was ultimately not enrolled, the record demonstrates that [the sub] was clearly performing work on the Project that was to be insured under the CCIP policy. Moreover, the plain language of the Wrap-Up Exclusion states that coverage for [the sub] is excluded in ‘[a]ll locations where you perform or have performed work that is or was to be insured under a consolidated (wrapup) insurance program . . ..‘ It does not state, as plaintiffs contend, that the exclusion only applies if [the sub] was actually enrolled in the CCIP policy.”