Media Coverage
Source: Law360
Media Coverage
12.04.12
In a ruling upheld by an Iowa appeals court, the court held that a standard liability waiver bars insurers from suing their policyholders’ contractors. The ruling, over property damage outside of a construction area, could convince other state courts to take on a similar view of waivers, attorneys say.
The waiver language in a standard American Institute of Architects contract is the factor which blocked Federal Insurance Co.’s suit against contractors, the appeals court decided. Federal covered Buena Vista County Hospital, where contractors were working on improvements when a sprinkler went off and caused major water damage. The hospital’s damage was covered by Federal, but later the insurance company filed a suit claiming the construction company should have to pay for some of the damage.
James Bobotek, a senior associate and member of Pillsbury’s litigation practice in Washington, D.C., said the last thing contractors want to see is an insurance company coming back and pointing its fingers at everybody.
"It just delays the project because everyone just stops and starts suing each other," Bobotek said. "The whole purpose of obtaining insurance and passing these risks to insurers is so the project doesn’t come to a grinding halt when there’s a problem."