DAN FITZMAURICE

Thanks to a State Supreme Court ruling, Connecticut insurers are going to be on the hook for covering contractors’ court costs if one of their subcontractors runs into trouble, bringing the state in line with most other states’ requirements.

A June opinion settled the matter in a case involving two subcontractors’ employees who sued the contractor after they were injured on a job site in 1999. The insurance company, Royal Indemnity, initially refused to cover the contractor’s court costs.

The Connecticut Supreme Court disagreed, and ruled that Royal Indemnity must cover costs for the contractor, Farmington-based Konover Construction Corp.

That will make it tougher for Connecticut insurers to deny this type of coverage in the future, said Dan FitzMaurice, a partner with Day Pitney in Hartford. Connecticut had been one of the few states where insurers did not have to cover contractors under these circumstances, he said.

“It adds Connecticut to the list of states that follow this rule, and as a practical matter in Connecticut it will encourage insurance companies to offer defense [to contractors],” he said.

Machua Millett of law firm Edwards Angell Palmer & Dodge, which has major offices in Hartford, said this type of coverage is usually included in a commercial general liability policy, and most often comes up when a passer-by or employee gets injured on a worksite.

“This sort of issue comes up a lot in the construction context.”

FitzMaurice said most construction agreements accept that a subcontractor will provide the contractor’s defense if that subcontractor’s work creates trouble that brings up lawsuits.

The judge ruled in this case that it made more sense for contractors to be an “additional insured” – in other words, to spread the risk to insurance companies. The subcontractor simply includes that higher insurance price in their contract bids, he said.