Construction Litigation of Additional Insured Endorsements: Blanket Clause Risks, Contractual Privity, Coverage Limits

Owners and contractors on construction projects routinely ask downstream contractors and subcontractors to sign contracts wherein the latter agrees to provide the owners and general contractors with additional insured coverage for accidents or damages resulting from the performance of subcontractors' work on the project. The purpose of that coverage is to transfer the risk to the entity closest to controlling the risk.

An examination of additional insured cases requires some background regarding the duty to defend standard in the state the claim is being presented. What facts an insured or insurer may rely on to trigger coverage or deny coverage varies from state to state with regard to facts that are extrinsic, or outside the complaint against the insured. Understanding what can and can't be used, and for what purpose, is critical.

One recurring issue is whether there is an obligation to defend an additional insured and what connection must be shown between the subcontractor's operations or work and the claims against the additional insured. This depends on the language of the endorsement, but recent cases have indicated that coverage may be triggered even where there were no allegations by the injured person against the named insured.

Additionally, extrinsic facts may be necessary, and useable in many states, to confirm "insured" status, such as whether a defendant is an "owner" entitled to coverage, or whether it faces liability relating to the work or operations of a particular subcontractor.

Issues surrounding additional insured coverage are constantly being litigated. Because there is such a wide breadth of case law, practitioners are well-advised that there is an increasingly large body of case law applicable to the nature and scope of additional insured coverage, especially in the construction arena.

Listen as our authoritative panel discusses the current state of additional insured litigation, how the allegations within the complaint (and the facts omitted) may affect a defense obligation, and how proximate cause is determined. The panel will address recent decisions in major jurisdictions that may affect future claims.

1. Additional insured coverage and recent litigation
   1. Different forms of additional insured endorsements: ISO forms, manuscript, and key language of each
   2. Defense obligation under the additional insured endorsement: the elements and checks in your state
   3. When can extrinsic facts outside of the complaint be used by the insured or insurer regarding a tender of defense
   4. Claims by named insured subcontractor's employee and the interplay between the indemnity agreement and the additional insured endorsement
   5. Duty to defend versus indemnify, and the concept that the "AI File" pays only defense costs
2. Update of relevant recent case law
   1. New York
   2. Pennsylvania
   3. California/Nevada

The panel will address these and other important topics:

• How is proximate cause determined when examining the named insured's connection to the accident?
• When can an injured employee of a named insured pursue an additional insured claim?
• What limits are there on the duty to defend in additional insured claims?