SDV Insights

LAW360.com recently surveyed attorneys to offer tips for what general contractors should – and shouldn’t – do when pursuing additional insured coverage.  According to the article, “With the broad array of risks present on a typical construction site, one of a general contractor’s top options to shield itself from liability for property damage and bodily injury claims is to secure expansive “additional insured” coverage through its subcontractors.”

In the piece, Greg Podolak discussed techniques for avoiding potential gaps in coverage:

“Carriers will try to say in the additional insured endorsement that they will only be responsible to provide limits for what is required in the trade contract,” said Greg Podolak, managing partner of Saxe Doernberger & Vita PC’s southeast office. “If it turns out the trade contract requires lower limits than the policy, the insurer will likely say it only wants to be responsible for those lower limits.” 

In that situation, since excess coverage is generally only accessible once the underlying primary insurance has been exhausted, the general contractor would be left on the hook for the remainder of the primary limits.

“Aligning with the primary insurance – assuming there is also an expectation of access to excess insurance – is most important,” Podolak said. “Requiring primary limits lower than the face value of the policy can result in a gap in getting to the excess insurance.”

Podolak said he has helped clients avoid potential gaps by requesting combined limits for both primary and excess additional insured coverage – for example, asking for $6 million in total coverage, rather than $1 million in primary and $5 million in excess.

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