Section 4.10 Contractual Liability Coverage

• Library: Construction Law 2016 Supp

C. (§4.10) Contractual Liability Coverage

Like all previous ISO CGL forms since 1986, the 2001 CGL Policy has contractual liability coverage “built in.” But it has several limitations that are relevant to many construction projects. These limitations include no such coverage for work within 50 feet of a railroad (for a discussion of this exclusion, see §4.34 below) and for professional services.

This coverage supports, in whole or in part, an insured’s indemnity to another. The extent of coverage will depend on the fact situation giving rise to the indemnity obligation, the particular language of the insured’s indemnity, the applicable state anti-indemnity statute (if any), and that state’s caselaw. In the construction industry, prime contractors or subcontractors are usually required to indemnify and to hold one or more project participants harmless against claims arising out of their work. These project participants may include a railroad or the project’s engineer or architect.

The relevant sections of the 2001 CGL Policy providing this coverage include exceptions to a policy exclusion, combined with the policy definition of an “insured contract”:

SECTION I—COVERAGES

COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY

. . .

2. Exclusions

This insurance does not apply to:

. . .

b. Contractual Liability

“Bodily injury” or “property damage” for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages:

(1) That the insured would have in the absence of the contract or agreement; or

(2) Assumed in a contract or agreement that is an “insured contract”, provided the “bodily injury” or “property damage” occurs subsequent to the execution of the contract or agreement. Solely for the purposes of liability assumed in an “insured contract”, reasonable attorney fees and necessary litigation expenses incurred by or for a party other than an insured are deemed to be damages because of “bodily injury” or “property damage”, provided:

(a) Liability to such party for, or for the cost of, that party’s defense has also been assumed in the same “insured contract”; and

(b) Such attorney fees and litigation expenses are for defense of that party against a civil or alternative dispute resolution proceeding in which damages to which this insurance applies are alleged.

. . .

SECTION V—DEFINITIONS

. . .

9. “Insured contract” means:

. . .

f. That part of any other...