Interplay With SIRS and "Other Insurance Provisions," - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Coverage Pitfalls for Additional Insureds: Interplay With SIRS and "Other Insurance Provisions," Interpreting AI Endorsements WEDNESDAY, SEPTEMBER 6, 2017 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Lawrence D. (Larry) Mason, Partner, Goldberg Segalla , Chicago John J. McLeod, Shareholder, McLeod Law Group , San Diego Matthew G. Jeweler , Counsel, Pillsbury Winthrop Shaw Pittman , Washington, D.C. Dawn A. Silberstein, Of Counsel, Wilson Elser Moskowitz Edelman & Dicker , San Francisco The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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Strafford Publications Webinar Coverage Pitfalls for Additional Insureds: Interplay With SIRS and “Other Insurance Provisions,” Interpreting AI Endorsements September 6, 2017 5

Faculty Matthew G. Jeweler Counsel | Pillsbury Winthrop Shaw Pittman LLP 202.663.9212 | matthew.jeweler@pillsburylaw.com John J. McLeod Shareholder | McLeod Law Group, APC 619.236.9938, x102 | jmcleod@mcleodlawgroup.com Lawrence “Larry” D. Mason Partner | Goldberg Segalla, LLP 312.572.8444 | lmason@golbergsegalla.com Dawn A. Silberstein Of Counsel | Wilson Elser Moskowitz Edelman & Dicker LLP 6 415.625.9255 | dawn.silberstein@wilsonelser.com

I. Overview of Key Issues Relating to Additional Insured Coverage Coverage Pitfalls for Additional Insureds: Interplay With SIRS and “Other Insurance Provisions,” Interpreting AI Endorsements Matthew G. Jeweler Counsel | Pillsbury Winthrop Shaw Pittman LLP 202.663.9212 | matthew.jeweler@pillsburylaw.com 7

Today’s Agenda • Overview of a few important issues to consider when obtaining additional insured (AI) coverage • How a self-insured retention (SIR) in the named insured’s policy is handled in the AI context • Priority of coverage when multiple policies cover the same risk • Differences in and interpretation of AI endorsement language 8

Scope of AI Coverage • Location(s) covered • Type of risks covered • Property damage • Bodily injury • Personal and advertising injury • Length of coverage period • Completed operations • How is coverage for years after the named insured finishes work accounted for? • The right entities as AIs 9 • Beware of issues re contractual privity and “blanket” AI endorsements

Language of the AI Endorsement • Not all AI endorsements are created equal • “Arising out of” vs. “caused, in whole or in part, by” • Watch out for other restrictive, potentially manuscript, language • Damage arising “solely” out of the named insured’s acts • Exclusions • Damage arising out of the acts/omissions of the AI • The impact of the AI’s own negligence 10 • Anti-indemnity statutes

Priority of Coverage • Which of several applicable policies applies first? • Do multiple policies share primary responsibility? • Consider waiver of subrogation rights • Named insured’s excess policies • Try to negotiate for clear policy language 11 • Consider an indemnity claim against the named insured

Policy Limits • Make sure the limits required in the underlying contract are actually provided in the policy • A policy that provides lesser limits obviously is a problem • A policy that provides greater limits can present complications as well • Consider pressing for one policy with combined limits • The underlying contract should be clear that the named insured’s indemnity obligation is not capped or limited by the amount of the AI policy limits 12

Certificate of Insurance • At the very least you need to obtain a certificate of insurance that confirms AI status • Best practice: do not rely on the certificate alone! • Typically does not contain the key AI endorsement language • AIs should request copies of the actual policies and have them reviewed by counsel as appropriate • The named insured may push back • As a fallback, request a copy of the AI endorsement 13

Think Ahead – Terms of the Underlying Contract • Try to incorporate as many of these items in the underlying contract as possible • Include important items as part of the overall contract negotiation • Be thoughtful about limitations or perceived limitations in the underlying contract – insurers may seek to limit coverage accordingly • Two overarching steps to securing proper AI coverage: • Spelling out the parameters and key aspects of AI coverage in the underlying contract 14 • Later, reviewing the policy to confirm the coverage matches up with what was agreed

II. Interplay of Additional Insured Coverage With SIRs in Named Insured’s CGL Policy THE SIR SURPRISE John J. McLeod Shareholder | McLeod Law Group, APC 619.236.9938, x102 | cgudaitis@vpl-law.com 15

SURPRISE | noun | sur·prise | sə(r) - ˈprīz | A feeling caused by something unexpected or unusual PERSONAL LIFE BUSINESS 16

THE SIR SURPRISE SURPRISING IMPACTS AVOIDING SURPRISES 17

SIR BACKGROUND SIR Background The 411 on SIR’S Historical Review- SIR’s vs. Deductibles Modern trend to blur historical distinctions 18

Relationship with AI & SIR Subject to Subject to Confers limitations in terms and Including SIR insured status AI conditions of endorsement the policy 19

Minimizing Contractual Indemnity Risks 1. AIE’S serve an important function 2. AI’S can transfer indemnity obligations on to the additional insurer 3. SIR’s limit the extent of this transfer 20

SIR Endorsements SIR endorsements are often manuscripted endorsements Huge variance in language Critical to read the endorsement 21

$500,000 22

THE SIR SURPRISE 23

DELIVERY OF THE AI Certificate of insurance doesn’t disclose SIR Unless you do more, you will never know 24

QUESTIONS TO ASK YOURSELF • Is the AI attached to the certificate? • Does the certificate disclose an SIR or deductible? • What did you just get? 25

IS THERE A LIABILITY EXPOSURE FOR THE BROKER? 26

$100,000 $100,000 $100,000 $100,000 $100,000 27

SURPRISING IMPACTS The unexpected ways a SIR can affect the coverage you think you are getting 28

WHAT DOES IT APPLY TO? A. DEFENSE B. INDEMNITY C. BOTH 29

PER OCCURRENCE VS. PER CLAIM SIGNIFICANCE Occurrence = accident or event Claim = Claimant 30

Why would an insurer limit who can satisfy an SIR? 31 Forecast Homes, Inc. v. Steadfast Ins. Co

Why does an insurance company care where you got the money to pay an SIR? 32

STACKING OF SIR’S 33

34

AVOIDING SURPRISES 35

USING YOU CONTRACT TO AVOID SURPRISES Draft your contracts to get what you want A contract requirement is only as good as the effort taken to insure compliance Don’t forget about renewals 36

DID YOU GET WHAT YOU ORDERED? 1. Is the additional insured endorsement attached? 2. Is an SIR or deductible identified in the certificate? 3. Do you want to ask for a copy of the SIR endorsement? 37

IF ALL ELSE FAILS Is there another way to get coverage under the AI policy? 38

PLAN VS. SURPRISE 39

III. Priority of Coverage for Additional Insureds When Several Policies Cover the Same Risk Lawrence “Larry” D. Mason Partner | Goldberg Segalla, LLP 312.572.8444 | lmason@golbergsegalla.com 40