Robert M. Currey & Associates, Inc.

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1 Robert M. Currey & Associates, Inc. Risk Management Advocate for the Real Estate Industry One Beacon Street, 22 nd Floor, Boston MA

Outsourced Real Estate Risk Management Privately owned since inception in 1981. The largest independent risk management real estate consulting firm in the United States, by any metric.

2 Outsourced Real Estate Risk Management Privately owned since inception in The largest independent risk management real estate consulting firm in the United States, by any metric. Representing more than 100+ real estate entities with aggregate values exceeding $200B. Consult annually on over 700+ separate insurance challenges spread over thousands of locations. RMC has 40 employees, 1/3 are lawyers. 2

What We Do Maximize insurance coverage, minimize premiums, and mitigate risk by leveraging the industry s largest private collection of insurance and real estate

We do not sell insurance nor do we take commissions (undisclosed or otherwise) on the purchase of any line of insurance.

3 What We Do Maximize insurance coverage, minimize premiums, and mitigate risk by leveraging the industry s largest private collection of insurance and real estate data. The Robert M. Currey difference: We are not insurance brokers. We do not sell insurance nor do we take commissions (undisclosed or otherwise) on the purchase of any line of insurance. We offer unbiased analysis and advice in a dark pool industry. Kate Sullivan, Senior Risk Management Consultant and In-House Counsel Michelle Long, Senior Risk Management Consultant Robert M. Currey & Associates, Inc. One Beacon Street, 22 nd Floor, Boston, MA

Singular Focus on Real Estate Property All Risk Property Earthquake Flood Wind/Hurricane Terrorism Builders Risk Insurance Liability Commercial/General Umbrella Garage Keepers Legal Workers Comp &

4 Singular Focus on Real Estate Property All Risk Property Earthquake Flood Wind/Hurricane Terrorism Builders Risk Insurance Liability Commercial/General Umbrella Garage Keepers Legal Workers Comp & Employer Auto Innkeepers OCIP/CCIP/OIP Professional/Financial Lines Directors & Officers Liability Errors & Omissions Fiduciary Liability Crime Coverage Employment Practices Liability Other Pollution Legal Liability Captive Solutions Cyber Liability 4

5 Additional Named Insured vs. Additional Insured Additional Insured: Such status allows for coverage to extend to damages incurred by the AI if there is some connection with the operations of the named insured. Ex: Owners included as an additional insured under a GC policy will only be afforded coverage to the extent the loss arises out of GC s work. Additional Named Insured: Such status allows for coverage to extend to all of the operations of that entity being endorsed as an ANI. Ex. Owner included as an ANI under a GC s policy should expect the policy to respond for all of owner s liability, ie. Liability associated with losses not arising out of the GC s work. Key Difference: Language in the additional insured endorsement will likely limit coverage extended to the additional insured to liability arising out of operations performed by or on behalf of the named insured whereas an additional named insured has unrestricted access to the policy for the ANI s liability. 5

Additional Insured Status Endorsements: During Construction Scheduled AI s CG 2010 Automatic AI s Contractual Privity Issues CG 2033 no upstream parties

CG 2010) CG 2010 11/85 ( arising out of your work includes completed operations) CG 2010 10/01 ( arising out of your ongoing operations no more

6 Additional Insured Status Endorsements: During Construction Scheduled AI s CG 2010 Automatic AI s Contractual Privity Issues CG 2033 no upstream parties CG 2038 upstream parties Endorsements: Products & Completed Operations Scheduled AI s CG 2037 Importance of Form Versions (ex. CG 2010) CG /85 ( arising out of your work includes completed operations) CG /01 ( arising out of your ongoing operations no more completed operations) CG /04 ( caused in whole or in part by your acts or omissions ) CG /13 (coverage capped at lesser of limits required in contract or available limits) 6

7 ISO s Additional Insured Changes Any bodily injury, property damage, or personal, or advertising injury still must be caused in whole or in part by the acts or omissions of the named insured, or others acting on behalf of the named insured. In addition, ISO added the following three major changes: 1) Only to the extent permitted by law; 1) No broader than that which you are required by the contract or agreement to provide for such additional insured. 1) Limit of the Lesser of the Policy Limit or the Limit Required by Contract 7

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10 Endorsement vs. Certificates of Insurance Endorsements: An addendum to the insurance policy which changes the scope of the original policy. The endorsement is attached to the policy and may add, remove, or alter the original policy. Certificates of Insurance: A document providing evidence that certain types of insurance coverages and limits have been purchased by the party required to furnish the certificate. The certificate provides information on types and limits of coverage, insurance company, policy number, named insured, and the policies effective periods. Note: Certificates of insurance provide no contractual weight, whereas endorsements do. 10

11 Primary & Non-contributory Primary & Non-contributory Clause stating that the required insurance will be first to respond and will not seek contribution from other insurance that may be available. Designed to ensure the intended policy will be the first to respond if and when there are other viable policies that could respond to the loss. A primary and non-contributory endorsement is expected to be added to the policy if required by contract. The policy intended to be primary shall not seek contribution from another policy. Concerned only with preventing an insurer from seeking its equitable or contractual independent right of recovery from other insurers allocation of fault is not in question. 11

12 Insurance & Indemnification Conceptually, we look to insurance to finance the indemnification. Typically the expectation is that multiple lines of insurance will be in place to respond to an indemnity. For example: CGL to Negiligence Professional liability to professional errors & omissions Pollution Legal Liability / CPL to environmental Etc. Indemnification provisions insulate the company from certain losses by requiring the other party to assume and to indemnify it against those losses. It is crucial that indemnity is crafted such that it does not render itself unenforceable and/or uninsurable where possible. There will always be elements of an indemnity which are effectively uninsurable. Ideally, indemnification provisions and additional insured coverage should work together when losses occur to furnish the level of protection the company expected when it entered into the contract. 12

13 Interplay between Additional Insured and Contractual Indemnity Traditionally, additional insured coverage was considered independent of contractual indemnification. Historically, anti-indemnity statutes did not affect the purchase and enforceability of insurance Even in circumstances when the scope of indemnity provided by the additional insured coverage was prohibited under the anti-indemnity statutes Some state anti-indemnity statutes expressly provide for an "insurance exception As contractual risk transfer moved away from contractual indemnification downstream parties began to perceive additional insured coverage to be in conflict with the very the reason for antiindemnity statutes. Anti-indemnity statutes in most states have a loophole, permitting uppertier contractors to use additional insured requirements to achieve the very same ends that are forbidden in the use of the hold harmless clauses & Courts in most states have permitted this even though the antiindemnity legislation is designed to protect the public from the dangers and consequences of unsafe, or poor quality, construction. 13

14 Strategies to Address the Interplay between Additional Insured and Indemnification Analyze the proposed additional insured coverage and its relationship with the underlying contract, including the indemnification provisions therein. Unless company representatives read the insurance policy that provides the additional insured coverage, however, they may have little idea how the additional insured coverage works. Before execution - consider the following questions: Does the insurance policy itself contain any provisions that limit the scope of additional insured coverage? Does the policy contain wording or an endorsement that can be read as incorporating by reference the underlying contract? Does the underlying contract contain any provisions that can be construed as limiting the scope of additional insured coverage? Consult if necessary with experienced insurance coverage counsel to ensure that the indemnification provision and additional insured coverage work in tandem to meet the company's coverage expectations. 14

15 Questions & Answers We will use this time to answer any questions you may have. Thank you for your time! 15

Coverage for Contractual Risk Transfer and Additional Insured Issues. Jeffrey J. Vita and Edwin L. Doernberger Saxe, Doernberger & Vita, P.C.

Coverage for Contractual Risk Transfer and Additional Insured Issues Jeffrey J. Vita and Edwin L. Doernberger Saxe, Doernberger & Vita, P.C. 1 Outline Introduction Contractual Indemnity Additional Insured