Downstream Insurance Coverage in Complex Construction Projects: Vetting to Mitigate Risk

Description

Parties to construction agreements typically rely on indemnification and additional insured provisions to manage risk between the various upstream and downstream parties to the contract. Most states now prohibit broad form indemnity terms, having passed anti-indemnity statutes that limit the scope of contractual indemnity provisions applicable to owners and general contractors for damages caused by the negligence of subcontractors and vendors.

Even with the inclusion of a savings clause, the contractual indemnity afforded upstream parties is limited, requiring parties to increasingly rely on insurance products to fill the risk gap. For smaller subcontractors, procuring insurance coverage that complies with the terms of their agreements poses a challenge in that it forces reliance on a broker to understand the coverage needs and sometimes predict them before a stated scope of work.

Counsel for owners, general contractors, subs, and vendors must be aware of the potential challenges in procuring and placing coverage in the face of a shifting coverage landscape and potentially unpredictable project environments.

Listen as our panel of experienced construction lawyers provides expert guidance on vetting downstream insurance coverage for complex projects, and offers critical insight on contract terms, pitfalls to avoid, and mitigating risk.