Use of Additional Insured Status to Reduce Attorneys' Fees


Although insurance requirements are typically addressed in most construction contracts, they are often given minimum attention. On the other hand, attorneys’ fees are always a major concern. Notwithstanding, requiring contractors and/or subcontractors to provide Additional Insured (“AI”) status on their Commercial General Liability (“CGL”) policies is an excellent way to significantly reduce or eliminate the party’s exposure to attorney’s fees.

An entity which has obtained AI status has a direct right of action against the contractors or subcontractor’s insurance carrier, as long as the underlying claim is based on the construction entity’s actions and/or inactions. Although, indemnification provisions require the party to be held harmless, the indemnification alone, without AI status, may not provide you the direct right of action against the carrier. With today’s construction defect cases costing in the hundreds of thousands of dollars in attorneys’ fees, AI status is worth negotiating its inclusion.

Although AI status is beneficial, it is not the answer to all problems. An entity who is the sole cause of a construction claim cannot rely upon on its AI status on another party’s CGL policy to protect it against its own wrong doing.

Although, most construction entities and/or project owners pride themselves as being knowledgeable in contract matters, Fowler White has a statewide construction practice, including four Board Certified Construction Attorneys, that can assist in drafting AI, and other equally important provisions, necessary to protect the client’s interests. For more information on construction matters, please contact Conrad Lazo.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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