Construction Faces Coverage Challenges

On three different occasions between 2001 and 2013, the standard forms for additional insured (AI) coverage in commercial general liability (CGL) policies sold to construction industry participants were revised to narrow access to such coverage. At the same time, various court decisions have taken a narrow view of the scope of “insured contract” coverage available to these policyholders under other portions of standard form CGL policies. The convergence of these two developments could portend trouble for the construction industry. Perhaps more than any other industry, construction depends on AI status and the ability to access insurance coverage for contractually assumed tort liabilities as standard risk management practice. These recent trends to narrow the available coverage suggest caution is appropriate for those who rely on AI and insured contract coverage in construction.