Coverage Analysis
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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). 

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