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25 Ins. Counsel J. 198 (1958)
Contractural Liability Coverage - Some Practical Aspects of Hold Harmless Agreements and Contracts of Indemnity

handle is hein.journals/defcon25 and id is 200 raw text is: INSURANCE COUNSEL JOURNAL Contractual Liability Coverage-Some Practical Aspects of Hold Harmless Agreements and Contracts of Indemnity G. M. MORRISON* New York, New York O NE of the important aspects of the contracting business is the desirabil- ity of the owner or the contractor, or both, to protect himself against legal liability arising out of torts of those contractors with whom he is doing business. This may be accomplished by inserting a Hold Harm- less Agreement otherwise known as a Contract of Indemnity' in the contract. Too often, however, the indemnitor fails or neglects to protect himself by not pur- chasing contractual liability coverage as a part of his general or comprehensive lia- bility policy of insurance. Why he so often fails to purchase such coverage has always been a mystery to me. One reason, and per- haps the most usual one, is that he neglects to show the contract to his insurance agent. As a prudent businessman he should realize the importance of seeking and then follow- ing the advice of his insurance agent con- cerning his insurance needs. Let us examine, for a moment, the in- surance agreements of a general liability policy insofar as they apply to bodily in- jury liability or property damage liability. As to bodily injury liability the usual agreement is for the company: To pay on behalf of the Insured all sums which the Insured shall become le- gally obligated to pay as damages because of bodily-injury, sickness or disease, includ- ing death at any time resulting therefrom, sustained by any person and caused by ac- cident. For property damage liability the com- pany agrees: To pay on behalf of the Insured all sums which the Insured shall become legal- ly obligated to pay as damages because of injury to or destruction of property, includ- ing the loss of use thereof, caused by acci- dent. (Note: While insurance companies are still reluctant to delete the words and caused by accident from the insuring *Vice President, American Surety Company of New York; member Casualty Insurance Committee. agreement for property damage liability they have shown a willingness to eliminate caused by accident from the bodily in- jury liability insuring agreement and sub- stitute therefor the word occurrence. The word occurrence when substituted for the words caused by accident means an event or continuous or repeated expos- ure to conditions which unexpectedly caus- es injury during the policy period. Of course, even when insurance has been placed on an occurrence basis, the policy does not apply to injury caused intention- ally by or at the direction of the insured.) Having noted the insuring agreement for bodily injury and property damage liabil- ity we must look at any applicable exclu- sions in the policy. Of particular import- ance is the exclusion stating the policy does not apply: To liability assumed by the Insured under. any contract or agreement except (1) a contract as defined herein ..... The policy defines contract as fol- lows: The word contract means, if in writ- ing, a lease of premises, easement agree- ment, agreement required by municipal ordinance, sidetrack agreement, or elevator or escalator agreement. It is significant that the usual Hold Harmless Agreement does not fall within this definition. I am sure that the importance of having adequate insurance protection will be read- ily observed. Contractual liability insur- ance can be added to the policy by endorse- ment for a premium charge. Typical insur- ing agreements under a contractual liabil- ity coverage endorsement read as follows: Contractual Bodily Injury Liability- To pay on behalf of the Insured all sums which the Insured, by reason of the liabil- ity assumed by him under any written con- tract designated in the schedule below, shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time re- sulting therefrom, sustained by any person and caused by accident. Contractual Property Damage Liability Page 198 April, 1958

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