Manage Injured Worker Claims Through Additional Insured Status
A very informative risk management article from Victor O. Schinnerer relates to having the contractor name the design professional as an Additional Insured under their General Liability coverage. They write “Construction operations are inherently risky, presenting the possibility that a construction worker could be injured or killed on a project site. Most owners understand that a key function of construction contracts is clear and effective risk allocation. Construction contracts typically require the general contractor or other party in charge of construction to protect the project owner, both through a contractual indemnity provision and by extending the coverage of the contractor’s commercial general liability policy to cover the owner as an additional insured. Often, owners also understand that such protections should extend to the owner’s prime design firm or design team. Claims from injured workers caused by the contractor’s negligence, even if that negligence is attributed only to the contractor’s management of the project, should be the responsibility and liability of the contractor as the entity in charge of the site and the project.
Most contractors understand and accept the fact that both the owner and the design firm as the agent of the owner are exposed to claims arising from the contractor’s operations—particularly claims involving jobsite injuries—and respond by meeting the contractual requirements for indemnity and insurance. However, some contractors resist including the design consultant as an additional named insured.”
Further in the article they state that when the design professional is “named as an additional insured, the design firm has the protections afforded the contractor under the policy. The design firm also avoids the threat of subrogation by the insurance carrier, which cannot subrogate against an insured. Most importantly, the design firm gains the right to be defended by the carrier. This is also important for the owner because it avoids unnecessarily eroding the limits of coverage under the design firm’s professional liability insurance policy and preserves those limits for the very purpose that the owner required this coverage—to protect the owner from losses due to the design firm’s professional negligence.” Click on Victor O. Schinnerer above to review the full article.