Building Design and Construction Handbook - Merritt - Ventech!

CONSTRUCTION PROJECT MANAGEMENT 17.49
17.15.5 Liability Policies Covering Contractor’s Operations
Anyone who suffers bodily injuries or whose property is damaged as a result of
the negligence of another person can recover from that person, if the latter is legally
liable. Every business should protect itself against claims and suits that may be
brought against it because of bodily injuries or property damage suffered by third
parties.
Maintenance of an office or yard, as well as the conduct of a construction job,
presents exposures to the public. There may be no negligence, and consequently
no legal liability on the part of the contractor, but should claim be brought or suit
instituted for an injury, the contractor without insurance coverage will require
trained personnel to investigate the claim and negotiate a settlement or defend a
lawsuit if the claim goes to court.
17.15.6 Commercial General-Liability Insurance
This is expressly designed to serve contractors by providing insurance that will pay
for bodily injuries and property damage suffered by third parties if the contractor
is legally liable, but the policy will also serve by defending the interests of the
contractor in court. Sometimes the litigation involves amount of damage; but frequently,
the contractor being sued is not legally liable for the injuries or damage.
It is fundamental, therefore, that a policy be obtained at substantial limits for both
bodily injuries and property damage, that the policy cover all existing exposures
and also provide for protection against exposures that may not exist or be contemplated
on the inception date of the policy. The scope of operations conducted by
most contractors is such that it is frequently difficult to visualize all the hazards
that may exist or come about simply by being in the construction business.
The commercial general-liability policy that covers all liability of the insured,
except that resulting from the use of automobiles, is a standard form available in
all states at rates regulated by law. This policy protects the contractor under one
insuring clause and with one limit against claims. Blanket coverage is provided at
a premium based on actual exposures disclosed by an audit at the end of the policy
term. As required by this policy, every contractor must maintain accurate records
of payrolls, value of sublet work, dollar amount of sales, and other factors that will
be important at the time an audit is made.
Under the bodily injury liability clause of this policy the insurance company
agrees to pay on behalf of the insured ‘‘all sums that the insured shall become
legally obligated to pay as damages because of bodily injury, sickness or disease,
including death at any time resulting therefrom, sustained by any person and caused
by an occurrence.’’ This is a very broad insuring clause. It obviously includes the
entire business operations of the insured.
Property-damage liability is also covered. Additionally, the policy provides Independent
Contractors Contingent Public Liability and Property Damage protection,
which insures the general contractor against subcontractors’ negligence.
There are certain exclusions in the policy that should be noted. The policy does
not include:
1. Ownership, maintenance, or use (including loading or unloading) of water
craft away from premises owned, rented, or controlled by the insured; automobiles
while away from the premises or the ways immediately adjoining; and aircraft under
any condition. However, this exclusion does not apply to operations performed by