The document discusses common methods of risk transfer in the construction industry such as broad form, intermediate form, and limited form contractual indemnity agreements. It provides examples of language used in each type of agreement and notes that New Jersey law voids indemnity agreements that purport to indemnify for damages caused by the sole negligence of the promisee. Additional topics discussed include additional insured endorsements, contractual indemnity versus additional insured coverage, and how these issues are approached in mediation. Contact information is provided for four construction law experts.

1. September 16, 2014

3. Carlton Spiller
Greenbaum Row Smith & Davis LLP
Adam Smith
Coughlin Duffy LLP
Christopher Carroll
Carroll, McNulty & Kull LLC
Deborah Masucci
Masucci Dispute Management and
Resolution Services

4.  What are the common methods of risk transfer in
the construction industry?
 Can mediation effectively handle insurance
issues?
 What do you consider when selecting a mediator?

5. What are some of the common provisions used in contractual indemnity
agreements and how may the specific language used impact the scope of the
contractual indemnity obligation?
Are these contractual indemnification provisions enforceable? (i.e., anti-indemnity
statutes)
Do the anti-indemnity statutes address insurance coverage as a risk transfer
alternative to a contractual indemnification agreement? (i.e., if the indemnity
provision is unenforceable, do the insurance requirements survive?)

6.  Broad Form
 Intermediate Form
◦ Example: Company A agrees
to defend, indemnify and hold
harmless Company B from
any damages or loss arising
out of or related to Company
B’s work or operations
regardless of whether the
damages or loss arises out of
Company A’s negligence or
the negligence of Company
B.
 Limited Form
◦ Example: Company A agrees to
defend, indemnify and hold
harmless Company B, from any
damages or loss arising out of
or related to Company A’s work
or operations and which also
arises out of Company A’s
negligence except for damages
or loss arising out of the sole
negligence of Company B.
◦ Example: Company A
agrees to defend, indemnify
and hold harmless Company
B, from any damages or loss
arising out of or related to
Company A’s work caused
by Company A’s negligence.
There is no duty to indemnify
Company B for Company B’s
own negligence.

7.  New Jersey’s Construction Anti-Indemnity Statute
◦ A covenant, promise, agreement or understanding in, or in connection with or
collateral to a contract, agreement or purchase order, relative to the
construction, alteration, repair, maintenance, servicing, or security of a building,
structure, highway, railroad, appurtenance and appliance, including moving,
demolition, excavating, grading, clearing, site preparation or development of
real property connected therewith, purporting to indemnify or hold
harmless the promisee against liability for damages arising out of
bodily injury to persons or damage to property caused by or
resulting from the sole negligence of the promisee, his agents, or
employees, is against public policy and is void and unenforceable ;
provided that this section shall not affect the validity of any insurance contract,
workmen’s compensation or agreement issued by an authorized insurer. N.J.
Stat. Ann §2A:40A-1.

8.  What are the most common versions of additional insured endorsements? (i.e., blanket contractual
endorsements; “arising out of your work” versus “caused in whole or in part by your acts or omissions”;
“completed operations” versus “ongoing operations” additional insured coverage; etc.)
 Does the modern “caused in whole or in part by” language require a finding of liability before a putative
additional insured is entitled to coverage? Can an insurer with the “caused in whole or in part by” language
simply argue that its duty to defend is turned into an obligation to reimburse in the event liability is
established?
 What are some of the pros and cons of contractual indemnity versus additional insured coverage?
 How are contractual indemnity and additional insured issues typically approached in a mediation?

9. “ARISING OUT OF”
“Additional Insured – Owners, Lessees or Contractors –
Scheduled Person or Organization”
WHO IS AN INSURED (Section II) is amended to include as
an insured the person or organization shown in the Schedule,
but only with respect to liability arising out of your work for
that insured by or for you.

10.  WHO IS AN INSURED (Section II) is amended to
include as an insured the person or organization
shown in the Schedule, but only with respect to
liability arising out of your ongoing operations
performed for that insured.

11.  Who is an Insured (Section II) is amended to include as an
insured any person or organization for whom you are performing
operations when you and such person or organization have
agreed in writing in a contract or agreement that such person or
organization be added as an additional insured on your policy.
Such person or organization is an additional insured only with
respect to liability arising out of your ongoing operations
performed for that insured. A person’s or organization’s status as
an insured under this endorsement ends when your operations
for that insured are completed.

12. WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the
Schedule, but only with respect to liability arising out of your ongoing operations performed for that insured.
With respect to the insurance afforded to these additional insureds, the following exclusion is added:
Exclusions
This insurance does not apply to “bodily injury” or “property damage” occurring after:
1. All work, including materials, parts or equipment furnished in connection with such work, on the project (other than
service, maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the site of the covered
operations has been completed; or
2. that portion of “your work” out of which the injury or damage arises has been put to its intended use by any person or
organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of
the same project

13.  Section II – Who Is An Insured is amended to include as
an insured the person or organization shown in the
Schedule, but only with respect to liability arising out of
“your work” at the location designated and described in
the schedule of this endorsement performed for that
insured and included in the “product-completed
operations hazard.”

14. Section II – Who Is An Insured is amended to include as an
insured the person or organization shown in the Schedule, but
only with respect to liability for “bodily injury”, “property damage”
or “personal and advertising injury” caused, in whole or in part,
by:
1. Your acts or omissions; or
2. The acts or omissions of those acting on your behalf; in the
performance of your ongoing operations for the additional
insured(s) at the location(s) designated above.

15.  How have NJ courts addressed the “property damage” caused by an “occurrence” issue?
(i.e., how the analysis may differ from an insured general contractor to an insured
subcontractor; repair/replace work versus consequential damages (or damages to non-defective
components, etc.)
 Significance of the subcontractor exception to the “your work” exclusion?
 When is the best time to mediate in a construction defect action and how are coverage
issues typically approached in a construction defect mediation?
 What are some emerging endorsements/exclusions in the construction defect context?
(i.e., continuous/progressive injury/damage exclusions – apply regardless of knowledge of
the loss by any property)

17.  Carlton T. Spiller
Greenbaum Rowe Smith & Davis LLP
732-476-2720; cspiller@greenbaumlaw.com
 Adam M. Smith
Coughlin Duffy LLP
973-631-6050; asmith@coughlinduffy.com
 Christopher R. Carroll
Carroll, McNulty Kull LLC
908-848-6300; ccarroll@cmk.com
 Deborah Masucci
Arbitrator
646-670-7224; dm@debmasucciadr.com