Brian Bries, Area V.P.-Construction Practice Arthur J. Gallagher & Co. Effective Use of Liability Insurance, Additional Insured Coverage, and Claims Handling Strategies Brian Bries, Area V.P.-Construction Practice Arthur J. Gallagher & Co. Tammy Kilty, All-Bry Construction Ryan Hiss Laurie & Brennan, LLP

Program Summary Preventative Measures Best Practices When the Claim Is Made Monitoring the Claim Text Questions to 708-205-0112

Preventative Measures Contract Clauses Flow Down Clauses Indemnification Limitation of Liability/Damages/ Waiver of Consequential Damages Warranty Periods/Statute of Limitations

Preventative Measures Insurance Coordinate requirements of all subcontractors with what is required of you Require Additional Insured coverage from subcontractors

Preventative Measures Liability Insurance Considerations Make sure your limitations meet the requirements of the contract Endorsements Primary/Non-Contributory Blanket Additional Insured Forms Blanket Waiver of Subrogation

Preventative Measures What Do Additional Insured Endorsements Do? Provide upstream parties with some degree of insurance coverage maintained by downstream parties Why Do Parties Demand Additional Insured Status? Greater protection than hold harmless/indemnification agreements Direct rights under the policy What Insurance Policies Allow Additional Insured Status? CGL Auto Umbrella/Excess Builders Risk

Preventative Measures Additional Insured Coverages ISO AI Forms (and many other manuscript forms) CG 20 10 and CG 20 37 (or equivalent) 11/85 (obsolete) 10/01, 07/04, 04/13 Be aware of manuscript AI coverage forms Primary, Non-Contributory Policy Language Follow Form Excess Coverage IL Horizontal v. Vertical case law Waivers of Subrogation WC, GL, Auto, other lines of coverage if applicable

Questions: Text 708-205-0112

Preventative Measures Very common approach today with no scheduling of names Usually tied to “written” or “executed” contracts Breadth of coverage is dependent on the “fine print” May not provide for “in whole or part” May not provide completed operations Often limited to limits or coverages required by contracts

Preventative Measures “…any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy.”

Preventative Measures Additional Insured– Where Required By Contract Who is an Insured is amended to read any person or organization to whom you become obligated to include as an additional insured under this policy, as a result of any contract or agreement you enter into 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.

Preventative Measures Want to Avoid the Following: The Subcontract agreement was never signed The Sub submitted an incomplete certificate of insurance The certificate of insurance and subcontractor AI coverage was never reviewed for compliance with the Subcontract agreement

Preventative Measures Certificate of Insurance Best Practices: Signed Contracts/Subcontracts with reviewed indemnity and insurance requirements (PRIOR TO STARTING THE WORK) Obtain Certificates of Insurance from Subcontractors

Preventative Measures Review for contractual compliance (PRIOR TO STARTING THE WORK) Coverage Dates, Limit Requirements, Carrier AM Best Ratings, Review of Specific AI Endorsements, Waivers of Subrogation Endorsements, Primary/Non-contributory Endorsements

Preventative Measures Internal Reporting Policy The superintendents, project managers, project executives should all have a specific protocol for reporting claims or potential claims. Document Retention Policy Document hold placed upon all project files: emails, letters, notes, diaries, accounting records, contracts, shop drawings, design drawings, calculations, change order requests, payment applications, payment receipts.

Questions: Text 708-205-0112

After Claim Has Been Made Contact Claims Team (in-house and outside consultants) Activate Documentation Retention Policy Investigate Interviews Critical Document/Evidence Gathering Non-party contact information Contract Term Review (obligations to repair/warranty/claims period)

After Claim Has Been Made Demand Repairs/Warranty Work Check contract requirements Notice of Claim to Insurance Carriers Your Insurance Additional Insured Carriers Considerations: deductible expense, loss run, insurance premiums

After Claim Has Been Made Reservation of Rights Letters Conflict of Interest Claim exceeds policy limits Gives Contractor Option of Hiring Its Own Counsel At Insurance Company’s Cost

After Claim Has Been Made Monitoring Claim During Litigation or Arbitration Establish point of contact for all communications Require reports from attorneys- at least quarterly Require phone call strategy sessions with in-house team Require copies of court pleadings and orders

Contact Information Brian G. Bries, Area VP – Construction Arthur J. Gallagher & Co. (630) 694-5155 Brian_Bries@ajg.com Ryan Hiss, Construction Lawyer Laurie & Brennan, LLP (312) 445-8768 Rhiss@LaurieBrennan.com