Another Reason Why You Shouldn’t Rely on Certificates of Insurance

With a recent case, a subcontractor
was working on a luxury high-rise condo on Manhattan’s Upper East Side and a
tower crane that the Sub was operating, collapsed causing seven deaths. There
were many injured as well and another building nearby was destroyed. The crane
rigger was charged with criminally negligent homicide and manslaughter. In July
2010, he was eventually found not guilty or all the charges.

The Sub was insured with the
liability limit of $1 million per occurrence and $2 million aggregate under a
commercial general liability insurance policy. The Sub was also insured by an
excess liability insurance policy, with the limit of $9 million, issued by
Admiral Insurance Co.

It was required under the Sub’s
trade contract with the general contractor that the name of the general
contractor and the property’s owner are listed under its policies as additional
insured’s. The Sub properly obtained such additional insured coverage under
both its GCL and excels policies. Although, the excess policy also contained an
exclusion for residential construction activities.

The owner and the general
contractor sought coverage under the policies insured to the Sub following the
crane collapse. However, it was revealed that the Sub had claimed in its
application for insurance coverage that it was a drywall installer that did not
perform any exterior work. The excess carrier denied coverage to the owner and
the GC on several grounds. One of the grounds was actually the Sub’s alleged material
misrepresentation on the nature of its work on its application for coverage.

 

The excess carrier filed a
declaratory judgment action seeking to completely rescind coverage.