Transfer And Division of Risk in Commercial Contracts

In the context of commercial contracts, the parties may use a variety of devices to limit their risk of liability, either by sharing or transferring that risk to other parties involved in the contractual relationship. These complex commercial transactions often give rise to complex insurance coverage issues. This program will discuss some of the common risk transfer mechanisms used in commercial contracts and highlight the important considerations to keep in mind when pursuing insurance coverage.

The presenters will focus specifically on joint ventures: how to ensure that a joint venture has proper insurance coverage, and how to avoid falling victim to common policy exclusions for joint venture liabilities.

The course will cover indemnity clauses and insurance requirements commonly used in contractor agreements, and how to navigate potential roadblocks to coverage such as anti-indemnity statutes and exclusions for liability assumed in contracts. It will also discuss additional insured status and the limitations to consider when seeking coverage as an additional insured under the insurance of another. The program will highlight several examples from the case law as well as sample insurance policy language.

Learning Objectives:

1. Consider how a joint venture can be insured, and whether defense costs are within or outside of joint venture liability limits
2. Discuss the question of whether indemnity provisions in commercial contracts can be invalidated by statute
3. Analyze how “Insured Contracts” are treated under commercial general liability policies
4. Review the benefits of additional insured coverage
5. Avoid pitfalls when seeking indemnity, insured contract coverage, and additional insured coverage