Commercial general liability (“CGL”) policies providing limits on a “per-project” basis have become standard in the construction industry. General contractors and other upstream parties on large construction projects, as a rule, require downstream subcontractors to maintain CGL coverage with limits provided on a “per project” basis. The goal is to ensure access to dedicated limits that are not exhausted or otherwise impaired due to losses on other projects. Contractors that require or are obligated to provide insurance with dedicated “per project” limits should, however, be aware that many excess policies ––which, despite “following-form” ––fail to provide the same “per project” aggregate limits as their underlying insurance. This issue is further illustrated in our discussion below of J.D. Eckman Inc. v. Starr Indemnity & Liability Company, wherein the United States District Court for the Eastern District of Pennsylvania ruled that an excess policy did not incorporate the underlying insurance’s “per project” aggregate limit.

The Background
In J.D. Eckman Inc., a highway construction company (“Eckman”) found itself simultaneously defending against ten Pennsylvania lawsuits. Eight of the lawsuits arose from a single project in Dauphin County, Pennsylvania, which caused several serious injuries and three fatalities. The other two lawsuits arose from a single project in Berks County, Pennsylvania, which caused two additional fatalities. The severity of the claims ensured that the company’s legal liability would exceed the limits of its primary insurance policy.

Reprinted courtesy of Kyle A. Bechet, Saxe Doernberger & Vita, P.C. and Richard W. Brown, Saxe Doernberger & Vita, P.C.

Mr. Bechet may be contacted at KBechet@sdvlaw.com
Mr. Brown may be contacted at RBrown@sdvlaw.com