When the wrap is damaged (usually by the mod or charger).
New wraps come as sleeves, pop battery inside and use hair dryer. Take care to rescue insulating paper washer or buy new ones. You can wrap over old wrap if you want to, wraps come in differing thicknesses but are all very thin.
Someone with better knowledge may say different, but from what I have read is that you rewrap if the wrap is damaged(ie if your mod has a tight fitting bay and it tears the top of the wrap when inserting/removing.
You can buy either pre cut wraps or buy a roll and cut to length, remove old wrap, replace and heat it with a hair dryer and it conforms to the battery shape