Wrap-Around Insurance Programs: Definition, Types, and Considerations

A wrap-around insurance program, often referred to as a wrap-around policy, operates in conjunction with Employment Practices Liability Insurance (EPLI). EPLI shields employers from claims alleging violations of employee rights, such as discrimination or wrongful termination. These claims can result in punitive or monetary damages, covering various expenses like medical costs, loss of income, and pain and suffering.

Employers opt for EPLI coverage to mitigate financial liabilities stemming from legal actions brought by employees. This is crucial when workers’ compensation or general liability insurance fails to provide adequate coverage for losses due to job-related injuries or illnesses.

EPLI policies usually come with limits on payouts per employee, injury, or illness, providing employers with a safety net to manage unforeseen legal expenses arising from employment disputes.

Wrap-around insurance programs extend beyond employee-employer interactions. In addition to EPLI-related coverage, the term is also used in the context of secondary or ancillary insurance policies for health and life insurance. These policies supplement existing coverage when a single policy is insufficient or does not adequately address current or future needs.

Another form of wrap-around insurance mitigates political risk. Companies may procure such policies to protect against financial losses resulting from adverse actions taken by foreign governments. This coverage may include protection against deprivation, government actions, embargo, sanctions, partial loss, and forced abandonment.

Punitive cases typically fall within the jurisdiction of civil courts, where restitution for financial losses is sought by the plaintiff. Unlike criminal cases, there is no prosecutor involved, and plaintiffs must retain legal counsel to represent them. Civil cases are adjudicated by judges, with no jury present, and do not entail the threat of imprisonment or criminal conviction.

No, wrap-around insurance programs can also extend to secondary or ancillary insurance policies for health, life, and political risk. These policies supplement existing coverage to address gaps or future needs.

Wrap-around insurance programs, particularly in employment practices liability cases, provide coverage for punitive damages that may not be covered by standard liability insurance policies. They offer additional protection to employers facing legal action from employees.