Lions, Tigers, and Reservation of Rights
Oh My! Navigating Construction Liability Risks
b y c h i p g e n t r y
our company has been sued. You attorney to defend the company.The CEO key employees have to spend countless
have notified your insurance com- wanted to understand whether his com- hourseducatingtheattorneyhiredbyyour
pany which replies in writing. pany was indeed fully protected by the in- insurancecompanyonyourbusiness,your
What’s your next step? There is a risk in surance company,and wanted our firm to industry,your products,etc.
trusting your commercial general liability serve as a watchdog and advise them on
insurance carrier to do the right thing. I the insurance coverage issues.
don’t suggest that every insurance com- “Depending on the specific state law
I explained to the CEO of InsuredWin-
pany acts in its own self-interests to the that applied to the issue,you have a poten- dows the detailed ins and outs of the in-
detriment of its insured.However,it’s not a tial conflict or an actual conflict with your surance coverage issues, strategies to
bad idea to have a full understanding of insurance company,”I said.
the potential, inherent conflict between There is a constant tension between and options to control the case’s defense.
your company and your insurance com- glazing and fenestration companies and The company CEO thanked me for the
pany in the context of a construction de- the insurance world.Of course,insurance insight into the complicated world of in-
doesn’t typically cover claims for product surance coverage issues and reservations
replacement, breaches of contract, of rights.Wewerethenabletofocusonthe
breaches of warranty, punitive damages, company,the underlying facts of the law-
I often receive calls from frustrated etc.The truth is,when an insurance com- suit, and the acute strategies to meaning-
glass, door and window manufacturers pany accepts and cashes your premium fullydefendagainsttheclaims,ratherthan
trying to figure out how to navigate the check, it promises two things: (1) It will getting unduly bogged down in insurance
treacherous waters of liability risks.A few hire a lawyer to defend you and (2) it will coverage issues.
days ago, I received a call from a national pay any damages on your behalf that are
manufacturer we’ll call “Insured Win- coveredunderthepolicyof insurance. You ous,theycanbecontrolledundertheright
dows.” As is often the case, the company may not fully appreciate that one of the conditions. Reservation of rights letters
was under attack from “Duey, Cheatem most substantial values to your insurance can be managed by maximizing your
and Howe,”a law firm with a reputation of policy isn’t the amount of insurance limits rightsunderyourinsurancepolicyandthe
putting manufacturers out of business. you purchased,it is the fact that the policy applicable law.
The CEO of the window company ex- requires someone else to pay for your de-
Addressing this critical issue at the out-
claimed,“I’m reading a letter from my in- fense attorney or attorneys, experts and set of a lawsuit is important.In my experi-
surance company reserving rights, other litigation costs.
back against a manufacturer selecting an
experienced fenestration defense counsel.
What many glazing companies do not If the insurance carrier is wrong in its cov-
disclaiming coverage,and discussing sev-
eral potential non-covered claims.What INSURANCECONCERNS
does it all mean?!?”After listening to sev-
eral minutes of stressful venting,I figured realize is that when their insurance carrier erage position and forced an unknowl-
out that the lawyers were threatening to reserves the right to potentially deny cov- edgeable attorney who it personally chose
sue over windows at a multi-million-dol- eragedowntheroad,perhapsseveralyears into the mix,the insurance carrier may be
lar project that they claimed were not per- after the litigation began, the manufac- found to have acted in bad faith. s
calls had already been exchanged. De- its own counsel and control the
mands were made to put Insured Win- case’s defense.This provides an op-
C h i p G e n t r y is a
dows’ insurance carrier on notice. The portunity to hire a seasoned attor-
insurancecompanywasnowinvolvedand ney who is well-versed in the
provided a letter titled “Reservation of nuancesof thefenestrationindustry.
Rights” in response to Insured Windows’ It is frustrating enough to be sued.It
request that its insurance carrier hire an is even more so when you and your
founding member of Call &
Gentry Law Group in Jefferson
City, Mo. He can be reached
USGlass, Metal & Glazing | June 2016