Construction Defect Claims: Impact of Horizontal vs. Vertical Exhaustion Rules on Multiple Layers of Coverage

Navigating Allocation Among Contractor's Policies, Contractor and Subcontractor Policies, and Additional Insured Carriers

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, September 9, 2015

Recorded event now available

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Program Materials

This CLE webinar will discuss vertical vs. horizontal insurance coverage exhaustion in construction defect disputes. The program will analyze the impact of exhaustion on allocation between the contractor’s primary and excess coverage, the priority of payment between the contractor and its subcontractors, and the impact on additional insured coverage. The program will discuss best practices for resolving allocation disputes in construction claims involving multiple parties and layers of coverage.

Description

One of the more complex issues in construction defect disputes involves property damage claims with multiple parties and implicating multiple layers of insurance. These claims often involve the contractor and several subcontractors.

Resolving coverage disputes hinges on understanding the relationship between primary and excess insurers and the point at which coverage from the excess policy is triggered. The outcome of horizontal vs. vertical exhaustion both among primary insurers and between primary and excess carriers is critical.

Exhaustion rules are also critical in determining which policy pays first among different parties—the contractor’s primary policy or policies of the subcontractors. More complex and contentious challenges arise when additional insured coverage is present.

Listen as our authoritative panel of insurance practitioners guides you through principles of vertical and horizontal insurance coverage exhaustion, how it impacts allocation between the contractor’s primary and excess coverage, and priority of payment between contractor and subcontractor policies and among additional insureds.

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Outline

  1. Horizontal and vertical exhaustion of coverage for construction defect claims
  2. Priority of coverage between contractors’ primary carrier and excess insurer
  3. Priority of coverage between contractor and subcontractor policies
  4. Impact of exhaustion rules on additional insured coverage
  5. Dichotomy of views among states and recent case law

Benefits

The panel will review these and other key issues:

  • How can counsel resolve issues that arise between the excess carrier and primary carrier when the primary carrier settles for less than the policy limits?
  • How do the exhaustion of coverage rules determine priority of coverage between the contractor’s policies and policies of subcontractors?
  • When additional insured coverage involves both primary and excess policies, what are the best strategies for resolving vertical vs. horizontal exhaustion?

Faculty

Rebecca DiMasi
Rebecca DiMasi

Partner
Buchanan Dimasi Dancy & Grabouski

Ms. DiMasi is a commercial trial lawyer, with her primary focus on insurance coverage and bad faith litigation. She...  |  Read More

David G. Jordan
David G. Jordan

Partner
Saxe Doernberger & Vita

Mr. Jordan focuses his practice on complex insurance coverage litigation. He has had extensive involvement in the areas...  |  Read More

John B. Wilson
John B. Wilson
Senior Vice President
Marsh Risk & Insurance Services

Mr. Wilson is the firm’s Pacific North Construction Practice Leader.  In this role, he is responsible for...  |  Read More

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