Construction & Infrastructure Law Blog : Construction & Infrastructure Lawyer & Attorney : Sheppard Mullin Law Firm : Public Works & Professional Liability

By Helen Lauderdale

Indemnification clauses in construction contracts often state that one party to the contract – the "indemnitor" – will defend and indemnify the other party from particular types of claims. On construction projects, the "indemnitors" are typically the contractor and architect/engineer ("A-E") who agree to defend and indemnify the owner – the "indemnitee." If the owner is sued for construction defects or personal injury which implicate the contractor or A-E, the owner usually tenders the lawsuit to them for defense and indemnity.
 

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By Edward B. Lozowicki and James G. Higgins

Owners, developers and major general contractors are ramping up their use of wrap-up insurance policies on building and industrial projects. When sponsored by an Owner, wrap-ups are dubbed  Owner-Controlled Insurance Program ("OCIPs"). If the general contractor sponsors the wrap-up, it is termed a Contractor Controlled Insurance Program ("CCIPs"). These policies offer significant cost savings to owners and generals. Traditionally, bid packages required the general contractor and its subcontractors each to carry liability insurance and to indemnify the Owner and name it as an additional insured. This arrangement has been criticized as requiring costly duplication of coverage, and causing needless litigation over indemnity rights. Wrap-ups seek to avoid these consequences by affording liability coverage to all participants on a project under a single policy. However there have been problems with wrap-ups such as inadequate policy limits and gaps in coverage. And the controversy over contractual indemnity clauses continues.
 

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