By Gary R. Semmer, Assured Partners
Great question- let’s examine some of the more important provisions:
- Indemnification- every Contract contains some form of Indemnity/Hold Harmless language which requires you to indemnify upstream parties for your acts or others that could cause Bodily injury, Property Damage and sometimes even Consequential Damages. They vary in scope from the standard AIA, ConsensusDocs, DBIA or “DIY” (Do it Yourself) versions. Although you may have some protection under Anti-Indemnity Statutes in most States, you still may be exposing yourself to situations “not covered” by your Liability Insurance. We recommend you review each contract to determine if there is wording “outside” of your liability coverage with your Attorney or Legal Counsel. The ASA Attorney’s Council has done extensive work in this area to provide contract equity.
- Additional Insured (A/I) requirements for General Liability, Business Auto & Commercial Umbrella policies- we are seeing requests for specific versions of the General Liability A/I endorsements like the ISO CG 2010 (Ongoing) and CG 2037 (Completed Operations) 10/01 editions which provide A/I status for upstream parties for “Your Work” without any restrictions or limitations in coverage. The later versions of the CG 2010 and 2037 (07/04. 04/13 & 12/19) editions all contain restrictions that limit A/I coverage which is “good” for you as a lower-tier Contractor. However, if you don’t provide the appropriate A/I coverage and there is a Liability claim, your Insurance Carrier may not provide A/I defense and coverage to the upstream parties, which could put you in “breach of contract” and could lead to possible litigation. Another area that is common today is requiring Primary Non-Contributory A/I status which means your coverage goes first and the upstream parties (Owner, GC & Others) triggers next. This will vary by State depending on if the case law permits Vertical vs Horizontal exhaustion of Limits- check with your Insurance Agent or Broker to determine what your responsibility is. Lastly, we are seeing requirements to maintain Completed Operations A/I status for 3-5 years post completion and sometimes through the Statute of Repose in the state you are performing the work which could require you to provide coverage for 10+ years which you will want to negotiate down if possible.
- Coverage Requirements- review other coverage requirements like Contractors Professional (Errors & Omissions) and Pollution (Environmental) Liability, Waiver of Subrogation and General Liability & Umbrella Per Project requirements to make sure you comply from a coverage and limits standpoint.
At AssuredPartners, we represent over 20,000 Construction Clients nationwide with 200 offices to serve you along with an experienced team of Construction Professionals to help you achieve your lowest possible Total Cost of Risk (TCOR).
About the Author
Gary Semmer, CIC CWCA, is Executive Vice President and Construction Practice Vertical Leader with AssuredPartners. Gary specializes in providing Insurance & Risk Management solutions to the Construction and Real Estate industries. He has served as President of the Independent Insurance Agents of Illinois (IIAI) and Associated Risk Manager (ARM) of Illinois. AssuredPartners is the 10th largest Insurance Broker and Consultant in the country providing Commercial Insurance, Risk Management, Employee Benefits through consulting and services. For more information on AssuredPartners, please contact Gary at Gary.Semmer@assuredpartners.com or asa@assuredpartners.com
