Product Update

Defense of Indemnitees Caselaw Discussed in Contractual Risk Transfer

When an indemnitee does not have additional insured status under its indemnitor's commercial general liability policy, it may still be entitled to defense from the indemnitor's insurer—outside the policy limits—if several requirements imposed under the policy's supplementary payments section are met. But these requirements will be difficult to comply with for many indemnitees. For example, (1) the indemnitor's obligation to provide the indemnitee with a defense—not merely a promise to pay attorneys' fees or similar language—must be explicit in the contract; (2) there must be no conflicts of interest between the indemnitor and indemnitee in pursuing a common defense; (3) the indemnitee must cooperate with the insurer in mounting a defense of the claim and in pursuing other sources of recovery, including the indemnitee's own insurance. The practical problems raised by these requirements were recently exemplified in a West Virginia case, Mulvey Construction v. BITCO, which is discussed and analyzed in this Contractual Risk Transfer release.

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