What to think about when facing lawsuits

You spend countless hours drafting contracts with indemnification and insurance clauses as a contractor. Whether you are a subcontractor, supplier or overseeing the project, you should know this.

Here are some things you should expect in a claim.

Claim originator

If you find yourself in a claim or have an accident that could result in a lawsuit, review the indemnity and insurance clauses in all of your contracts. Identify who you have to provide coverage for and who owes you coverage. For example, under state laws, general contractors tend to have the most extensive indemnity for people working on their projects. At the same time, most subcontractors must provide indemnity for the general contractors who hire them.

Party notification

If you face a claim, immediately notify your insurance provider and all parties that owe you indemnity. In your notice to the parties, demand a defense and refer to the clause proving that in your contract. Also, ask them to notify their insurance provider and request a policy cover sheet.

Additional insured coverage

Two additional insured endorsements can change who is liable. For example, the standard endorsement states that the policy only covers an additional insured if the liability arises from your work. The other version says the policy covers additional insureds when your acts or omissions cause damage. Courts interpret these endorsements differently, so consider that when drafting contracts and choosing an insurance provider.

There are many things to consider for who has a responsibility when it comes to claims in the construction business. Therefore, make sure you keep these things in the back of your mind when you are drafting contracts or facing legal issues.