Product Update

Property Subject to Waiver of Subrogation Discussion Updated in Contractual Risk Transfer

Perhaps the most frequently litigated issue with regard to construction contracts and builders risk subrogation is the scope of the waiver of subrogation in terms of the property to which it applies. Since most construction contract waivers of subrogation, including those found in the American Institute of Architects (AIA) documents, are keyed to the "work" to be performed by the contractor pursuant to the construction contract, issues frequently arise as to pre-existing or adjoining property. For example, if a contractor is hired to reroof a building and causes damage to existing walls, is that damage within the scope of the contractor's "work" (i.e., the reroofing of the building)? If not, the contractor may be subject to subrogation for the damage.

This Contractual Risk Transfer release contains an updated and expanded discussion of case law broadly applying waivers of subrogation, with an emphasis on whether the AIA Document A201 waiver of subrogation applies to both "work" and "non-work" property. A summary is also included in the September 2017 Release Notes.

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