The ISO's endorsement revisions: clarification or increased confusion?
Most commercial contracts, including construction contracts, professional services agreements, leases, and other similar agreements, include risk-allocation mechanisms such as indemnification and insurance requirements clauses. Far too often, these clauses are treated as boilerplate provisions, and are ‘borrowed’ from older contracts without any meaningful review of the language. While inclusion of such arcane, incomplete, or unclear provisions has never been recommended, many parties have nevertheless given little thought to the impact of these clauses. There are many reasons for this — one of the most common being that, particularly with respect to additional insured issues, contracting parties have understood that the language of the applicable insurance policy is what really matters.
The Insurance Services Office’s (ISO) recent revisions to most of the standard additional insured endorsement forms have dramatically changed the landscape. These revisions have placed heightened emphasis on parties’ contractual language that, in many cases, will restrict a CGL insurer’s coverage obligations to additional insureds not to the scope of coverage as set forth in the applicable insurance contract, but rather to the specific terms of the named insured’s contracts with third parties.
In addition, the revised additional insured endorsements will narrow coverage to the scope permitted by state ‘anti-indemnity’ statutes, requiring insurers and courts to embark on a complicated process that requires review of documents extrinsic to the insurance policy to make what was previously a relatively simple coverage determination. Indeed, these revisions will require a coverage analysis process that cuts against the recent trend of courts to rely on the insurance policy language to the exclusion of such extrinsic documents…
If you are registered and logged in to the site, click on the link below to read the rest of the Pillsbury briefing. If not, please register or sign in with your details below.
News from Pillsbury Winthrop Shaw Pittman
News from The Lawyer
Briefings from Pillsbury Winthrop Shaw Pittman
Law firms and clients that are caught unaware of changes to international data protection legislation risk heavy fines.
Energy reform legislation in Mexico gives the private sector unprecedented opportunities in the Mexican electrical power industry
Mexico’s president recently signed into law a historic package of legislation to restructure the nation’s electrical power sector. This article discusses the legislation.