Owners of construction projects face a myriad of risks, including personal injury, physical damage to the project during and after construction, and damage to neighboring property, and commonly protect from such risks through the contractors’ insurance programs. Owners contractually require their contractors to maintain insurance policies at certain coverage levels, and require that the owner be named as an additional insured on such policies, which protects the owner from claims by third parties for property damage or personal injury. However, a recent case out of the First Department decided that a common insurance policy endorsement that is issued for such purpose may not be providing owners with the protection they are expecting. Gilbane Building Co./TDX Construction Corp. v. St. Paul Fire and Marine Insurance Company, No. 653199/11, 2016 WL 4837454 (1st Dept., Sept. 15, 2016).
Risk Allocation
A standard insurance policy that is issued to businesses to protect against liability claims is the commercial general liability policy (CGL policy). CGL policies cover three basic areas: bodily injury and property damage, personal and advertising injury (including libel, slander, false arrest and copyright and trademark infringement), and medical coverage. In the context of construction projects, the CGL policy covers legal liability and defense costs which arise out of an accidental occurrence that causes bodily injury or property damage during the performance of the contractor’s work.
