Wrap-Around Insurance Program

A wrap-around insurance program is an additional policy that supplements a primary insurance policy to provide coverage gaps—most commonly for punitive damages arising from employment practices liability claims. It “wraps around” an admitted Employment Practices Liability Insurance (EPLI) policy to extend or broaden protection where the primary policy is limited or excludes certain exposures.

Key points

Wrap-around policies commonly provide coverage for punitive or other damages that an EPLI policy may not fully cover.
EPLI protects employers from claims by employees such as discrimination, wrongful termination, harassment, and other employment-related allegations.
Wrap-around insurance also appears as secondary or ancillary coverage in health and life insurance and as additional political risk protection for companies operating overseas.
Coverage terms, limits, and availability vary by insurer and jurisdiction—review policy language carefully.

How it works

A primary EPLI policy responds first to covered employment-related claims up to its limits and subject to its terms and exclusions.
If the primary policy excludes punitive damages or has limits that are insufficient, a wrap-around policy can provide additional coverage for those specific exposures.
The wrap-around can function as excess coverage (paying after the primary limit is exhausted), or as a difference-in-conditions/terms product that fills specific gaps (for example, covering punitive damages excluded by the primary policy).
The exact interaction—priority of payment, limits per claim or per employee, and conditions—depends on the contract language of both the primary and wrap-around policies.

Common types and uses

Employment practices wrap-around: Supplements EPLI by covering punitive damages or expanding limits for employment-related suits.
Health and life wrap-around: Acts as secondary or ancillary coverage when an existing health or life policy doesn’t meet current or anticipated needs.
Political risk wrap-around: Protects companies operating internationally against losses from government actions such as expropriation, embargoes, sanctions, forced abandonment, or other sovereign acts.

Important considerations

Policy limits and exclusions: EPLI and wrap-around policies typically include limits on payouts (per employee, per claim, and aggregate). Confirm whether punitive damages are excluded or capped in the primary policy and whether the wrap-around specifically covers them.
Civil versus criminal remedies: Punitive damages are awarded in civil cases. Plaintiffs pursue civil remedies (usually monetary), not criminal penalties. This affects claim dynamics, legal costs, and how insurers evaluate risk.
Jurisdictional variation: Laws governing punitive damages, attorney fees, and insurance recoverability differ by state and country. Coverage that exists in one jurisdiction may be restricted or unavailable in another.
Costs and underwriting: Wrap-around coverage can be more expensive or harder to obtain for organizations with prior employment claims, high-risk industries, or operations in politically unstable regions.
Contract clarity: Carefully review definitions, exclusions, sublimits, priority of payment, and whether the wrap-around requires the primary policy to be “admitted” or placed with specific carriers.

When to consider a wrap-around program

Your primary EPLI excludes punitive damages or its limits are insufficient for your exposure.
Your business operates in multiple jurisdictions with varying liability laws or in countries with elevated political risk.
Existing health or life coverage leaves material gaps that a secondary policy could economically fill.
You want broader protection against reputational, regulatory, or political exposures not fully addressed by standard policies.

Conclusion

A wrap-around insurance program is a targeted tool to fill coverage gaps left by primary policies—most commonly to address punitive damage exposure in employment-related claims, but also for supplemental health/life coverage and political risk protection. Because terms and availability vary widely, review policy language closely and consult insurance counsel or a broker to determine whether and how a wrap-around should be structured for your needs.