Priority of Liability Insurance Coverage and Horizontal and Vertical Exhaustion

Glasses lying on insurance policy document

Insurance is crucial in order to properly assess risk, flow down risk, and manage risk.

June 22, 2020
David Adelstein - Florida Construction Legal Updates

Recently, I participated in a webinar involving the horizontal and vertical exhaustion of insurance coverage. Say what?

This pertains to the PRIORITY of liability insurance coverage and the interface between a general contractor’s (or upstream party’s) primary insurance and the subcontractor’s (or downstream party’s) excess insurance, particularly when the general contractor is required to be indemnified by the subcontractor and named as an additional insured under the subcontractor’s liability policies.

For instance, let’s assume the general contractor has a $2M primary policy and a $5M excess policy. Its subcontractor has a $1M primary and a $5M excess policy. The general contractor is an additional insured under the subcontractor’s policies and the subcontractor is required to contractually indemnify the general contractor. An issue occurs caused by the subcontractor’s negligence resulting in a $5M judgment against the general contractor and the subcontractor.

Mr. Adelstein may be contacted at dma@kirwinnorris.com



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