{"id":901626,"date":"2023-09-20T14:47:26","date_gmt":"2023-09-20T20:47:26","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901626"},"modified":"2023-09-20T14:47:29","modified_gmt":"2023-09-20T20:47:29","slug":"builders-risk-additional-insured-modular-hotel","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/builders-risk-additional-insured-modular-hotel\/","title":{"rendered":"Construction Litigation Roundup:\u00a0\u201cBuilder\u2019s Risk Indeed\u201d"},"content":{"rendered":"\n

Daniel Lund III | Phelps Dunbar<\/a><\/p>\n\n\n\n

A contractor for a hotel in Seattle was tasked with constructing the hotel utilizing premanufactured modular hotel rooms. The modular unit portion of the project was the subject of a $15.8 million subcontract between the general contractor and the manufacturer. The manufacturer was also responsible to the GC for shipping and installing the modular units. <\/p>\n\n\n\n

Shipping was to be \u201cDDP,\u201d or \u201cDelivery Duty Paid\u201d \u2013 which, according to a New York federal court, \u201cis an international shipping term meaning that the seller assumes all responsibilities and costs for delivering property to the named place of destination, including export and import clearance, fees, duties, and taxes.\u201d Additionally, per the subcontract, the manufacturer was responsible for \u201censur[ing] all modular units [were] covered, secured[,] and protected from damage during the shipping process\u2026.\u201d The modular units were shipped from Poland to Seattle. In the shipping process, the units spent some time in the Port of Everett in Washington state, where the units sustained water damage while sitting in port. <\/p>\n\n\n\n

A related damage claim made by the subcontractor against the general contractor\u2019s builder\u2019s risk policy. On the face of the policy, the policy covered subcontractors as \u201cadditional insured\u201d parties, covered all manner of materials and the like to be used on the project, and would provide that coverage in the process of transporting the materials insofar as \u201cinland or coastal waters\u201d were concerned. Yet, the builder\u2019s risk insurer refused to cover the claim for the damages to the modular units which occurred while sitting in port in Everett.<\/p>\n\n\n\n

In ruling in favor of the builder\u2019s risk insurer, the court determined that the subcontractor was not an \u201cadditional insured\u201d under the builder\u2019s risk policy for purposes of the storage of the modular units at the port in Everett. The builder\u2019s risk policy contained an express limitation on the point: \u201cAs respects manufacturers and suppliers, their interest is limited to their site activities only.\u201d <\/p>\n\n\n\n

The manufacturer\u2019s position in opposition was that it was a \u201csubcontractor,\u201d rather than a manufacturer, according to its agreement with the general contractor, noting that the incident subcontractor expressly declared that \u201cfor the avoidance of doubt, Polcom is a\u00a0\u2018Subcontractor\u2019 under the terms of the Contract Documents.\u201d The builder\u2019s risk insurer<\/a> differed, agreeing only that it was \u201cnot in question\u201d that the manufacturer would qualify as a \u201csubcontractor\u201d and therefore an \u201cadditional insured\u201d for its activities at the actual site of the hotel construction.<\/p>\n\n\n\n

The court continued: \u201c[O]ur reading of the Additional Insured clause is consistent with the purpose of builder\u2019s risk insurance generally. \u2026 We agree with [ the builder\u2019s risk insurer] that \u2018builder\u2019s risk policies are designed to cover damage to buildings under construction and the associated equipment and tools used to construct the buildings,\u2019 and such policies are \u2018not issued to become a substitute for the additional insured\u2019s own property away from the construction site.\u201d <\/p>\n\n\n\n

Additionally, based on the facts above, the court determined that the modules while in port away from the project site were not the \u201cCovered Property\u201d of the general contractor.<\/p>\n\n\n\n

Polcom USA, LLC v. Affiliated FM Ins. Co., 2023 U.S. Dist. LEXIS 152220 (S.D.N.Y. Aug. 29, 2023)\u00a0<\/em><\/a><\/p>\n\n\n\n

\n\n\n\n

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Daniel Lund III | Phelps Dunbar A contractor for a hotel in Seattle was tasked with constructing the hotel utilizing premanufactured modular hotel rooms. The modular unit portion of the project was the subject of a $15.8 million subcontract between the general contractor and the manufacturer. The manufacturer was also responsible to the GC for… Continue reading Construction Litigation Roundup:\u00a0\u201cBuilder\u2019s Risk Indeed\u201d<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10721],"tags":[382,9895,11891],"class_list":["post-901626","post","type-post","status-publish","format-standard","hentry","category-insurance","tag-additional-insured","tag-advise-consult","tag-builders-risk-insurance-coverage","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nConstruction Litigation Roundup:\u00a0\u201cBuilder\u2019s Risk Indeed\u201d - 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