Everyone in construction loves OPI— other people’s insurance. The most common and direct way to access OPI is to require it in your construction contracts, usually via additional insured status. But in recent years, insurance companies have successfully narrowed access to additional insured coverage through litigation and policy drafting. If you want to be an additional insured to OPI these days, then get your contracts right and make sure your insurance is right!

Construction projects commonly transfer the risk of third-party claims through indemnification and additional insured coverage under commercial general liability (CGL) policies. The objective is to transfer the risk to the party in the best position to control the risk and for that party to have appropriate insurance. As is well known, if a subcontractor causes bodily injury or property damage at the project, the general contractor and property owner will almost certainly also be named as defendants against the claim. Done correctly, additional insured coverage will provide upstream parties, like the general contractor and owner, enormous protection. But many things can go wrong in this area, frustrating the entire risk transfer plan.

In recent years, insurance companies have turned to clever wording in their insurance policies to limit additional insured coverage that usually has been available to owners or other contractors. In 2018, New York’s Court of Appeals affirmed the First Department and held that a particular additional insured endorsement required contractual privity, i.e., a direct written contract between those parties. See Gilbane Building Co./TDX Construction v. St. Paul Fire & Marine Insurance, 31 N.Y.3d 131 (2018). One of us, Allen Wolff, wrote about this Gilbane decision with colleague Dennis Artese following the First Department’s 2016 decision, noting that it was a hyper-technical reading of policy language at odds with common usage in the industry. See Dennis J. Artese & Allen R. Wolff, “Courts Chip Away at Significant Construction Industry Coverage,” Anderson Kill Policyholder Advisor (Nov./ Dec. 2016).

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Allen R. Wolff is a shareholder in Anderson Kill's New York office and co-chair of the firm's construction group.

Ethan W. Middlebrooks is a shareholder in the firm's New York office and a member of the insurance recovery and construction groups.

Kathleen Gatti was a summer associate at the firm and is a third-year law student at St. John's University School of Law.