Q&As

Where, under a building contract, an employer has taken out insurance in joint names, does that give the contractor protection from a subrogated claim being brought against them by the insurer in the name of one of the other insured parties?

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Produced in partnership with Rebecca Prigg of CMS
Published on LexisPSL on 19/06/2020

The following Construction Q&A produced in partnership with Rebecca Prigg of CMS provides comprehensive and up to date legal information covering:

  • Where, under a building contract, an employer has taken out insurance in joint names, does that give the contractor protection from a subrogated claim being brought against them by the insurer in the name of one of the other insured parties?
  • Subrogation
  • Joint names insurance under building contracts
  • Subrogation and joint names insurance

Where, under a building contract, an employer has taken out insurance in joint names, does that give the contractor protection from a subrogated claim being brought against them by the insurer in the name of one of the other insured parties?

Subrogation

It may first be useful to recap how subrogation works. In the event of a successful claim being made under an insurance policy, insurers can typically exercise rights of subrogation to seek to recover the amounts paid out under the policy from those liable for causing the loss/damage which led to the claim. Rights of subrogation enable the insurer to step into the shoes of the insured to bring an action in the insured’s name against the offending party or parties. One important exception to this position applies where joint names insurance is procured.

See Practice Note: Subrogation in insurance and reinsurance.

Joint names insurance under building contracts

Building contracts commonly require either the employer or contractor to procure insurance of the works (and, in some cases, other structures) in the joint names of those parties. Such contracts also often require that additional parties, such as sub-contractors and funders, be recognised as insured under the policy. Although building contracts typically refer to ‘joint names’ insurance, what is actually required is ‘composite

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