National Roofing Legal Resource Center

Contract provision addresses a subcontractor's non-standard CGL policy with open roof or torching exclusions.

The purpose of commercial general liability insurance is to ensure a contractor involved in a project has the insurance resources to pay for unexpected property damage or personal injury loss arising during its construction operations. Ensuring all tiers of contractors on a project maintain adequate CGL insurance is an important means of managing and allocating the risks among project participants. If a roofing contractor hires a subcontractor, the roofing contractor has liability for the acts of its subcontractor. For example, if your subcontractor is working on a reroofing project and is in the middle of tearing off a section of the roof when a pop-up storm occurs, the roofing contractor can be held liable for any resulting water damage to the interior of the building where your subcontractor was working. Therefore, you want to make sure your subcontractors have adequate insurance to cover them in the event of a loss arising from their operations or work.

Insurance coverage depends on the policy language. Variations in policy terms may leave gaps in coverage. Because of labor shortages and competitive reasons, roofing contractors are more frequently hiring subcontractors and labor-only subcontractors who may have a non-standard CGL policy issued by a non-admitted, surplus line, insurance carrier. Non-standard policies invariably contain exclusionary policy language or endorsements, which can drastically reduce or eliminate basic coverages that roofing contractors typically expect a CGL policy to include.

The contract provision below focuses on two types of exclusions found in non-standard CGL policies that are particularly worrisome for roofing contractors—the open roof exclusion and open flame or torching exclusion. Although the language may vary from policy to policy, the open roof exclusion typically is worded to exclude any damages from moisture entry resulting from an "open roof"—i.e., when a roof system or section of a roof has been removed, leaving the decking, supporting structure or interior of the building exposed to the intrusion of water, sleet, snow or hail. The torching exclusion typically is worded to exclude any property damage caused by the application of open flame or heat-applied roofing materials, so a fire casualty from torching would be excluded from insurance coverage.

A Certificate of Insurance for a non-standard CGL policy will look identical to a standard CGL policy. Thus, it is not enough to request a copy of your subcontractor's Certificate of Insurance. Rather, to ensure your subcontractors have adequate insurance coverage in place, a roofing contractor should obtain a copy of the subcontractor's policy and all endorsements. A roofing contractor should include a provision, such as the one mentioned, within the insurance requirements section of any subcontract used when hiring a subcontractor.

Prohibiting non-standard CGL policy with open roof or torching exclusions: Commercial general liability insurance maintained by Subcontractor shall not include an exclusion or coverage limitation applicable to open roofs, water damage claims, heat-applied roofing, or use of open flame or torching. Roofing Contractor shall be entitled to withhold moneys otherwise owed to Subcontractor in the event Roofing Contractor has reasonable grounds to believe that it may become legally obligated to a pay claim or damages due to the Subcontractor, including a failure by Subcontractor to maintain insurance required by this Agreement.


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