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The Transfer of Risk Through Express Indemnity does not Always Lessen Uncertainty when a Claim Arises
By: Daniel A. Cribbs and Ravi R. Mehta
November 30, 2014
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The transfer of risk through express indemnity does not always lessen uncertainty when a claim arises
Additional insured endorsements and express indemnity provisions are common risk transfer mechanisms, but they have generated uncommonly complex and difficult-to-reconcile judicial holdings. Litigation concerning priority-of-coverage disputes that include consideration of the vertical and horizontal exhaustion doctrines is necessarily complex, but it is part of an evaluation of the risks, rights, and obligations of clients engaging in commercial contracts. Courts must consider the insurance policies of the parties as well as the agreements between the insureds to determine the order in which each party’s policies must respond to a given loss. As one court has observed, “[E]stablishing a pecking order among multiple insurers covering the same risk…has been characterized as ‘a court’s nightmare.…’”1