COVID-19 has created chaos in the construction world. One of the biggest problems is staffing projects to meet deadlines on the project. But, what if your company is hit with a COVID-19 outbreak and you cannot staff the job? Have you already agreed to indemnify the upstream contractor or owner for any damages stemming from a COVID-19 outbreak? We recommend reviewing your indemnity obligations to determine your risk and the [...]
Construction contracts typically require a subordinate contractor, either the general contractor subordinate to the owner or subcontractor subordinate to the general contractor, to list the upstream party as an additional insured and require the subordinate party to indemnify the upstream party for any claims or damages on the project. The goal of these two provisions is to shift the risk of liability for injuries sustained by a subordinate party's employees [...]
2013 ISO form changes for Additional Insured Endorsements try to limit coverage to an indemnity agreement. The insurance afforded to such additional insured described above...Will not be broader than that which you are required by the contract or agreement to provide for such additional insured. Is this enforceable? Referring to a third party contract as a means to dictate coverage terms could possibly be a violation of state insurance regulations. After all, the third [...]
How does a policyholder enforce a contract in which one party assumes the risk of another? Let's break it down two ways: By additional insured (AI) endorsement. AI is an insured. Insurer owes AI fiduciary duties. AI must follow policy terms for coverage. AI does not need to have a written contract with Named Insured for coverage to apply. In most states, AI coverage will include negligent acts of AI in addition to [...]
Most Midwest states have a statute the bars indemnity for construction related projects. Iowa, Kansas and Missouri do not. However, Nebraska, North Dakota, South Dakota and Minnesota do. All parties to any contract that involves any type of construction or design must be aware of these statutes. If not, AIA or other standard contract provisions on indemnity may not be upheld or enforceable in a court of law. Is there [...]
There are three essential steps to railroad risk transference through insurance: 1. Add an indemnity clause to all contracts making clear that you are asking for indemnity for the contractor's or vendor's negligence. If you do intend to seek indemnity for the railroad's negligence too, this language needs to be clear and unequivocal in order to adhere to most states' requirements. Not all states allow exculpatory indemnity. (I will write more about this later. [...]
Most Midwest states have specific statutes that bar one party from asking for indemnity from another party in a construction related contract. Iowa, Kansas and Missouri do not. However, Nebraska, North Dakota, South Dakota and Minnesota do. All parties to any contract that involves any type of construction or design must be aware of these statutes. If not, your AIA or other contract provisions on indemnity may not be upheld or enforceable in a court of law. This is [...]
Here are three simple rules for obtaining indemnity and insurance on a construction project if you are the owner or the General Contractor. #1. Make all subcontractors add you as an additional insured on their CGL policies by endorsement. Insist upon the ISO 1985 version, which would cover you for losses incurred even if it is your fault. This is the broadest form available. #2. Draft a contract with the subs that contains two separate clauses: one [...]
Railroads can be covered for losses caused in whole or in part by a contractor. If a railroad is added to the contractor’s Commercial General Liability (CGL) insurance policy as an additional insured, all losses which arise out of the contractor’s work should be covered. The case of Cont’l Cas. Co. v. Auto-Owners Ins. Co., 238 F.3d 941, 944 (8th Cir. 2000) explains this concept of risk transference. There, Burlington Northern R.R. Co. contracted with [...]
I often discuss the role of the courts in broadening coverage for additional insureds in a Commercial General Insurance (CGL) policy. Here is another case where a court has extending coverage – probably well beyond what the underwriter intended at the time the policy was issued. In the case of Evanston Ins. Co. v. ATOFINA Petrochemicals, Inc., 256 S.W.3d 660, 666 (Tex. 2008), ATOFINA contracted with Triple S Industrial [...]
Adding another company as an Additional Insured under your own Commercial General Liability (CGL) policy is a common practice. The addition protects that other entity against your company’s negligence. The coverage is almost always limited to “your” work, meaning the work being performed by the Named Insured, not the Additional Insured. This is commonly done in conjunction with an indemnity agreement between the parties. Additional Insured status is a method [...]
