CGL Policy
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Subcontractor agrees to indemnify and hold harmless Contractor from and against any and all claims, suits….and damages resulting from subcontractor’s performance of the work…..

This starts the indemnification agreement in the contract you signed for a new project. You’ve heard about something called Blanket Contractual Liability Coverage in your Commercial General Liability (CGL) Policy, so surely all is fine if you sign the contract. If something goes wrong, your CGL Policy will protect you against claims made by the other party to this contract. Won’t it?

Unfortunately, it might not. Most CGL policies do include coverage that comes into play when the Named Insured assumes the tort liability of another party to pay for bodily injury or property damage to a third party or organization. Tort liability means liability imposed by law in the absence of any contract; a claim for damages caused by negligence, for example. The problem is that there is big difference between claims for “bodily injury or property damage” covered by the CGL policy and “any and all” claims.

“Any and all” claims can include things like failing to perform the work according to the contract specifications, failing to pay suppliers or subcontractors, or infringing on a patent held by another. The CGL policy doesn’t cover these types of claims. Even if it did, these are not bodily injury or property damage claims to which contractual liability coverage might apply.

Just because the insurance policy doesn’t cover the liability you’ve assumed, doesn’t mean you’re off the hook. You are still responsible for all of the things you agreed to do in the contract, including holding harmless the other party for any and all claims.

Keep in mind, too, that the contractual liability coverage in the CGL policy can be modified by endorsements. Some policies, for example, remove the coverage, unless the contract is for a lease of premises or other specifically described contract. Others may provide contractual liability coverage, but not for contracts where one assumes liability for claims that don’t result, at least in part, from one’s own acts or omissions.

Before signing a contract that includes an indemnification agreement, be familiar with what coverage your policy provides and share that information with the attorney you hire to review the contract. This is the best way to avoid assuming liability that is broader than the coverage provided by your CGL policy