CRIS Contract Analysis & Indemnification Flashcards

A contractor's subcontract requires the subcontractor to name the GC and owner as additional insureds on its completed operations coverage for 10 years after project completion. Why is this important?

Answer: Construction defect claims for latent defects often surface years after project completion, beyond the standard policy period

Latent construction defects such as water intrusion or structural failures may not manifest until years after substantial completion, making long-term completed operations coverage critical.

What does 'waiver of subrogation' language in a construction contract require an insurer to do?

Answer: Waive its right to recover from a third party after paying a loss to the named insured

A waiver of subrogation endorsement prevents the insurer from suing a contractually specified third party (e.g., another contractor) to recover amounts paid to the insured.

Which type of construction contract clause limits the contractor's total liability to the owner to the amount of insurance proceeds actually recovered?

Answer: Limitation of liability clause

A limitation of liability clause caps the contractor's financial exposure, often to insurance proceeds recovered, contractual price, or a fixed dollar threshold.

An 'anti-indemnity statute' in a US state is primarily designed to:

Answer: Void construction contract provisions that require a party to indemnify another for that other party's own negligence

Anti-indemnity statutes invalidate contractual provisions that shift liability to a party—typically a subcontractor—for losses caused solely or partially by the indemnitee's negligence.

In reviewing subcontractor insurance certificates, a CRIS professional should verify which of the following to confirm true contractual compliance?

Answer: That the required endorsements (additional insured, primary/non-contributory, waiver of subrogation) are actually attached to the underlying policy, not just noted on the certificate

Certificates are informational only and do not guarantee endorsements exist; the only way to confirm compliance is to obtain and review copies of the actual policy endorsements.

A construction owner requires contractors to maintain 'occurrence' form general liability rather than 'claims-made' form. The primary reason is:

Answer: Occurrence policies cover claims arising from events during the policy period regardless of when the claim is reported, providing longer-term protection after project completion

Occurrence form CGL covers any claim arising from an occurrence during the policy period, even if reported decades later, eliminating the tail coverage risk inherent in claims-made policies.