Owners of construction projects often manage risk by imposing insurance requirements on their contractors. Contractors, in turn, look to their insurance agents to arrange insurance satisfying contract specifications. Bill Chapman recently secured a defense verdict in Waterbury,Connecticut Superior Court in a case brought by a utility company involving claims that its contractor failed to properly insure an underground vault maintenance project. An explosion killed one worker and injured another. The utility settled the resulting claims for over $8 million. It sought to recover this sum and additional damages of approximately $1.5 million from the contractor, alleging claims of breach of contract and misrepresentation. The contractor brought a third-party professional liability claim against its insurance agency. Settlement discussions were unavailing because the utility never retreated from demands which were far in excess of the E&O coverage available to the agency. Over the course of a month-long, high-stakes trial, Bill successfully demonstrated to the jury that the agency had procured appropriate standard form insurance for the project. Defense expert testimony and evidence from the Connecticut Insurance Department warranted the conclusion that the additional insured coverage met the contract requirements set by the utility, and was never intended to provide stand-alone coverage to the utility for its sole negligence. The jury's defense verdict in favor of the contractor exonerated the agency. If you are facing a professional liability claim involving insurance requirements in construction contracts, please do not hesitate to contact us.
Photo Credit: The Verge