defined to mean a liability that would
be imposed by law in the absence of any
contract or agreement.
The party who agrees to assume the final consequences of liability is commonly
referred to as the “indemnitor.” The party
who is able to transfer its financial consequences of liability to the indemnitor is
commonly referred to as the “indemnitee.”
Very often, the indemnitee wants to
be held harmless and indemnified for
the acts or omissions of the indemnitor
which might implicate the indemnitee in
a claim or suit. Likewise, the indemnitee
will agree to hold harmless and indemnify the indemnitor to the extent that the
indemnitee’s acts or omissions implicate
The question here is: Are these the
kinds of agreements that can be categorized as tort liability assumed? The answer is no, and the reason is that neither
party has assumed the tort liability of the
So, when the indemnitee begins to seek
coverage and the hold harmless agreement
does not involve any of the five automatic-type contracts, the indemnitee will be
without protection. Furthermore, when
the additional insured coverage is contingent on an “insured contract,” the indemnitee who asked to be an additional insured will also be without protection here.
Other Points to Consider
What claims personnel also have to know
about additional insured coverage and
contractual liability is whether the tort liability assumed is permitted by law. Many
states have anti-indemnity statutes that
hold void and unenforceable sole negligence, or both sole and partial negligence.
The statutes of other states may hold
void an unenforceable sole or sole and
partial negligence, subject to an insurance
exception. This means that the laws are
not affected by the validity of insurance as,
for example, when an indemnitee is able
to obtain additional insured coverage. The
problem, of course, is whether the additional insured coverage is broad enough
to encompass the tort liability assumed.
A great deal is written about anti-in-
demnity statutes with a common state-
ment being that these statutes hold void
and unenforceable sole negligence, or sole
and partial negligence. Claims personnel
should not believe these kinds of opinions.
Since a number of states do not even have
anti-indemnity statutes, it behooves claims
personnel to check these laws carefully.
Claims personnel also have to check the
entire policy carefully, including endorse-
ments. What they may find, for example, is
that a CGL policy issued with an additional
insured endorsement whose coverage is
contingent on an “insured contract” is still
not being applicable because of modifica-
tions to the definition of “insured contract.”
When the 1986 CGL provisions were in-
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