INDEMNITY ISSUES
The underlying plaintiff's
attorneys fees that were assessed against the insured pursuant to an underlying
contract were held to be recoverable from the defendant's insurer as a
"cost" taxed under the Supplementary Payments coverage, rather than as
"damages" chargeable against the limits of the policy. INA v. National
American Ins. Co. of California, 37 Cal. App. 4th 195, 43 Cal. Rptr.2d
518 (4th Dist. 1995).
Additional
Insured Endorsements
A.The 2009 Endorsement
1.Terms:
2009
1993
Who Is An Insured (Section II) is amended to include as an
insured the person or organization (called "additional insured")
shown in the Schedule but only with respect to liability arising
out of:
1.Your ongoing operations performed for the additional
insured(s) at the location designated above; or
2.Acts or omissions of the additional insured(s) in
connection with their general supervision of such
operations...
2009
03/97
Who Is An Insured (Section II) is amended to include as an
insured the person or organization (called "additional insured")
shown in the Schedule but only with respect to liability arising
out of:
1.Your ongoing operations performed for the additional
insured(s) at the location designated above; or
2.Acts or omissions of the additional insured(s) in
connection with their general supervision of such
operations. ...
3.Additional Exclusions This insurance does not apply to:
a."Bodily injury" or "property damage" for which
the additional insured(s) are obligated to pay
damages by reason of the assumption of liability in
a contract or agreement. This exclusion does not
apply to liability for damages that the additional
insured(s) would have in the absence of the
contract or agreement.
b."Bodily injury" or "property damage" occurring
after:
i.All work, including materials, parts or
equipment furnished in connection with
such work, on the project (other than
service, maintenance or repairs) to be
performed by or on behalf of the additional
insured(s) at the site of the completed
operations has been completed; or
ii.That portion of "your work" out of which
the injury or damage arises has been put to
its intended use ...
c."Bodily injury" or "property damage" arising out
of any act or omission of the additional insured(s)
or any of their "employees" other than general
supervision by the additional insured(s) of your
ongoing operations performed for the additional
insured(s).
d."Property damage" to:
i.Property owned, used or occupied by or
rented to the additional insured(s);
ii.Property in the care, custody or control of
the additional insured(s) or over which the
additional insured(s) are for any purpose
exercising physical control; or
iii.Any work, including materials, parts or
equipment furnished in connection with
such work, which is performed for the
additional insured(s) by you.
2.A 2009 does not cover completed operations, which is the major source
of liability in construction defect cases.
3.The 3/97 version of the 2009 endorsement goes on to exclude coverage
for contractual liability (i.e., insured contracts.)
4. Some subcontracts specify the acceptable form of endorsement. It
they do specify, 2009's will seldom be satisfactory. If you represent a
G.C., you should make sure the contract specifies that the A.I.
endorsement contain terms such as those on a 2010 Endorsement.
B.The 2010 Endorsement
1.Terms of the 11/85 Version, titled "ADDITIONAL INSURED -
OWNERS, LESSEES OR CONTRACTORS (FORM B)"
2010
11/85
WHO IS AN INSURED (Section II) is amended to include
as an insured the person or organization shown in the Schedule,
but only with respect to liability arising out of "your work" for
that insured by or for you.
2.This is the "standard" form of A.I endorsement and is frequently specified
as the acceptable form of additional insured endorsement. While it may
not, itself, allow you to pass the buck, it at least makes somebody share
the burden.
3.The 3/97 Version of the 2010 Endorsement
2010
03/97
WHO IS AN INSURED (Section II) is amended to include
as an insured the person or organization shown in the Schedule,
but only with respect to liability arising out of your ongoing
operations performed for that insured.
4.The 3/97 Version of the 2010 Endorsement (as well as the 1993 version)
provides coverage only for ongoing operations, and not for completed
operations. Therefore, like the 2009, they may not be acceptable to
G.C.’s who are meticulously documenting their insurance rights.
C.Blanket A.I. Endorsements
1.A blanket A.I. endorsement can be manuscripted to clarify the exact risk
undertaken (such as excluding architects’ and engineers’ professional
services) or that the insurer’s agent has been given notice of the increased
risk (by, for example, requiring that a Certificate of Insurance have been
issued.) Generally, the concept is that if the insured agrees in writing
to
make another party an A.I., the other party is automatically an A.I.
SAMPLE:
Section II - Who Is An Insured is amended to add: Any person
or organization who you become obligated to include as an
additional insured under this policy, as a result of any contract or
agreement you enter into, excluding contracts or agreements for
professional services, which requires you to furnish insurance to
that person or organization of the type provided by this policy, but
only with respect to liability arising out of your operations or
premises owned by or rented to you. However, the insurance
provided will not exceed the lesser of:
1.The coverage and/or limits of this policy, or
2.The coverage and/or limits required by said contract or
agreement.
2.The risk for the subcontractor’s insurer is in not knowing how many
subcontracts its named insured has entered into. Some blanket A.I.
endorsements include language specifically stating that contracts
entered into both before and after policy inception provide blanket
A.I. coverage to the G.C. Have these insurers really performed an
underwriting investigation sufficient to determine what they are taking
on
through such a blanket endorsement?
TYPES of Indemnity
Agreements
Type I - Express
and unequivocal agreement by indemnitor to indemnify indemnitee for indemnitee's
negligence, whether that negligence was the sole or concurrent cause of
harm (broadest coverage for indemnitee).
Type II - Provides
for indemnity without addressing issue of indemnitee's negligence and provides
indemnity, at most, for indemnitee's passive negligence. Inapplicable if
indemnitee actively negligent (active vs. passive distinction).
Type III - Indemnitee
negligence, either active or passive, bars indemnification (judicial rejection
of Type III clause). |