In the initial review of a claim, it is important to examine any contract documents to see if your defendant or insured may have a right to assert a claim for express contractual indemnity or additional insured coverage. This article will provide a brief introduction to Massachusetts law on these important topics.
I. Express Contractual Indemnity.
The first question is whether the indemnity provision is valid. Under Massachusetts law, indemnity provisions are generally valid, absent an applicable statute.
Massachusetts has a statute, G.L. c. 149, 29C, which invalidates indemnity provisions that require a subcontractor to indemnify someone against a claim for injury or damage “not caused by the subcontractor or its employees, agents or subcontractors.” If an indemnity provision is overbroad, it is not enforceable, even if the subcontractor did, in fact, cause the injury or damage. See Harnois v. Quannapowitt Development, Inc., 35 Mass.App.Ct. 286, review denied, 416 Mass. 1106 (1993). The indemnity provision will be read to comply with the statute if it includes the phrase “to the fullest extent permitted by law.” See Callahan v. A.J. Welch Equipment Corp., 36 Mass.App.Ct. 608 (1994).
Another Massachusetts statute invalidates indemnity provisions in leases that protect the landlord against liability “for any injury, loss, damage or liability arising from any omission, fault, negligence or other misconduct of the lessor or landlord on or about the leased or rented premises or on or about any elevators, stairways, hallways or other appurtenance used in connection therewith…” G.L. c. 186, §15.
Assuming that the contract includes a valid indemnity provision, the next question is whether it will be interpreted so as to protect the defendant from liability for its own negligence. Unlike some other states, Massachusetts does not strictly construe indemnity provisions. Instead, indemnity provisions are reasonably construed so that general language may be sufficient to protect a defendant against liability for its own negligence. See Shea v. Bay State Gas Co., 383 Mass. 218 (1981).
If the contract includes an indemnity provision, an important first step is to tender the defense of the case to the other party to the contract, as well as its insurer. The tender letter should quote the applicable indemnity provision and demand defense and indemnity. The tender letter triggers any defense obligation created by the contract.
II. Additional Insured Provisions.
The contract may also require a party to obtain insurance, naming the defendant as an additional insured. The party may provide a certificate of insurance, purporting to show that it complied with the insurance requirement.
Upon receiving a claim, the defendant should tender it to the insurer listed on the certificate of insurance. The defendant should ask for a complete copy of the insurer’s policy, so that it can confirm that the policy provides the required coverage.
It will be important to determine whether the policy issued to the other party provides primary coverage for the defendant. Under Massachusetts law, a court resolves that issue by comparing the other insurance clauses of the two policies. Mission Ins. Co. v. U.S. Fire Ins. Co., 401 Mass. 492 (1988). The defendant’s own policy may say that its coverage is excess over any coverage provided by a policy that names the defendant as an additional insured.
Assuming that the other party did not obtain the required insurance, the defendant should tender the defense to the other party and assert that it violated the contract by failing to obtain the required insurance.