Trending Toward a Wrap to Avoid Illusionary Coverage

摘要

Recent case law and the high cost of additional insured defense have created confusion and uncertainty in the contracting community. A contractor may believe that he has provided coverage for the appropriate parties in an additional insured endorsement, only to find that the various parties actually have very limited coverage. For instance, a subcontractor includes the general contractor and the owner/ developer on an additional insured endorsement. The endorsement has a variation of the words "as required by written contract" tacked on by the carrier. If the endorsement is read literally, the subcontractor does not have a contract with the owner/developer. These five simple and seemingly straightforward words can be interpreted by the courts in very different ways from what the contractor likely intended. Based on current case law and the court, the owner may not be covered by the endorsement in the event of a problem.