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It’s Not the Whole Story When It Comes to Making Sure Parties Are Fully Covered

Construction contracts usually include many provisions aimed toward transferring legal liability from one party to another. In an agreement between a general contractor and a subcontractor, the sub assumes the general’s liability. The contract does this by inserting an indemnity agreement (also known as a hold-harmless agreement) into the contract’s terms.

The contract may also require the sub to have the general named as an additional insured on its general liability insurance policy. Though not all contracts do this, it is a mistake for either contractor to assume that the insurance company will provide the same protection to the general without an additional insured endorsement to the policy.

Liability Coverage

The standard Insurance Services Office Commercial General Liability Coverage Form specifically excludes coverage for liability the insured assumes in a contract. However, it adds coverage back if the contract is an ‘insured contract,’ as the policy defines the term. The policy’s definition includes hold-harmless agreements where the insured assumes another’s tort liability. That would appear to take care of the sub’s obligations under the contract, but it is not the whole story. The coverage may still contain a potentially large gap for the general.

It is important to keep in mind that, in any liability-insurance claim scenario, the parties fall into three categories: insurance company, insured, and claimant. A claim may involve multiple insureds, multiple claimants, or even multiple insurance companies, but all parties will fall into one of the three categories. If a party is not an insurance company and is not an insured by virtue of an additional insured endorsement, then it must be a claimant. Therefore, a general contractor in this situation becomes a claimant along with all other claimants seeking damages.

The Cost of Legal Defense

While the general contractor may receive the same recovery for damages that it might have received as an additional insured, it might not fare as well regarding the cost of its legal defense. The CGL policy pays for defense costs incurred by anyone who is an insured under the policy, and coverage for those costs is in addition to the policy limits. If the policy has a limit of $1 million per occurrence and an insured is found liable for $1 million and runs up $500,000 in defense costs, the policy pays for both in full. As a claimant, however, the general can recover defense costs only if the hold-harmless agreement with the sub requires the sub to indemnify it for defense costs.

Also, it is likely that coverage for those costs will not be in addition to the policy limits. The ISO CGL policy provides defense in addition to the limits for the general only if all of the following conditions are met:

  • The sub assumed the general’s liability in an insured contract;

  • The policy covers the loss;
  • The sub assumed the general’s defense costs in the contract;
  • There is no conflict of interest between the general and the sub;
  • Both parties ask the company to control and conduct the defense and both agree to the same counsel for defense; and
  • The general agrees in writing to cooperate with the insurance company in the settlement of the claim.
  • If any one of these conditions is not met, the company will pay the general’s defense costs only until the claim exhausts the insurance limits.

    Coverage for defense costs is one of the most important benefits of being named as an additional insured on another entity’s liability insurance. An entity that needs this coverage should require the other contractor to provide the additional insured endorsement. Relying on the contractor’s contractual liability coverage is a major financial gamble.

    David W. Griffin Sr. is senior vice president of the Dowd Agencies. He has more than 30 years of experience in the insurance industry. He holds his advisor’s license, as well as the professional designation certified insurance counselor; (413) 538-7444;[email protected]. The Dowd Agencies is a full-service agency providing commercial, personal, and employee benefits, with four offices in Western Mass.

    Stern Challenges Await Area’s New Mayors

    This fall’s elections brought changes at the top for many area communities. Indeed, there will be many new mayors settling into office in January, and many will face immediate — and stern — challenges.

    We wish them the best because, while Springfield is the unofficial capital of the Pioneer Valley and the focus of much attention in light of its recent struggles, the continued health and well-being of other large communities is a key factor in the overall success of this region.

    The challenges facing the new mayors vary, but the common denominator is that the communities need strong leadership, and they need it now.

    Let’s start in Agawam, where the survivor (that’s the best word for it) in this fall’s election is Richard Cohen, the former mayor and now mayor-elect. His immediate challenge is to restore a sense of honor and pride in this community. The off-duty exploits of outgoing Mayor Susan Dawson and the recent mayoral election — which included no less than seven candidates, more than half of whom had absolutely no business seeking this seat — has made Agawam the butt of seemingly unending jokes.

    The embarrassing election is over, and it’s now incumbent upon Cohen to make people sit up and take notice of Agawam for other reasons, particularly economic development. There hasn’t been much of this lately, due largely to a lack of a clear vision about what this community wants to be and how it needs to get there.

    Cohen’s first priority is to assemble some land on which businesses can locate, and then drive new development. All eyes have been focused on the so-called FoodMart Plaza, now known as Agawan Town Center, which was vacant for years and is now vacant again after the Steve & Barry’s fiasco, but there are other problems as well. There is no retail, and a crippling lack of commercially zoned property. Cohen can start with the town’s PR crisis, but his bigger assignment is growing the tax base.

    Westfield has done well in that regard in recent years, and it is incumbent upon incoming Mayor Dan Knapik to continue to create opportunities for growth. While Agawam is land-poor, Westfield has plenty, and it has a turnpike exit and a municipal airport as attractive assets.

    The biggest challenge for Knapik and his community is downtown, which has struggled for decades now. Outgoing Mayor Michael Boulanger and Westfield State College President Evan Dobelle have made some significant strides over the past few years in taking an overlooked and underappreciated asset (the college) and making it into a force for economic development.

    Knapik has a lot on his plate, but building on the momentum gained with regard to WSC is priority one. Westfield will never be a true college town, like Amherst or Northampton, but it can be more of a college town, and it must become one.

    While Agawam and Westfield confront challenge and opportunity, perhaps no city in the region is at more of a critical crossroad than Holyoke, and this is the situation facing Mayor-elect Elaine Pluta.

    For starters, the city will soon be hiring a new police chief and a new school superintendent, meaning that there will be key leadership changes across the board, which are always daunting. But the elephant in the room is the planned high-performance computing center being developed by UMass, MIT, Harvard, and a host of other players.

    The center will almost certainly become reality, though the facility itself will not generate tax revenue and will only create a few dozen jobs to start. What isn’t known is what kind of economic development can follow in the wake of such a facility. There is speculation (see story, page 6) that such a center can eventually attract government agencies conducting specific research initiatives, institutions of higher learning, private businesses that want or need to be near such a facility, and support businesses ranging from restaurants to copying centers.

    Holyoke should strive for all of the above, and to do this, it must be bold and imaginative in the creation of incentives that will bring businesses and institutions to the city. This is a once-in-a-lifetime opportunity for this former mill city to reinvent itself as a city defined by innovation.

    Politics has a way of getting in the way of progress in Holyoke. Pluta, a veteran city councilor, can’t let that happen. She must forge the partnerships needed to enable this once-proud city to take full advantage of the opportunity that is presenting itself.


    Giving Back

    The Boston Business Journal recently named PeoplesBank a top charitable contributor and number 2 in the category of ‘Companies with the Highest Volunteer Hours.’ The bank has contributed approximately $700,000 to charitable and civic causes and employees donated 6,700 volunteer hours over the past year. Here, James Morton, left, president and CEO of the YMCA of Greater Springfield, and Douglas Bowen, president and CEO of PeoplesBank, discuss the bank’s recent support of Camp Weber and Camp Fun City.

    Victory Celebration

    Springfield Mayor Domenic Sarno (second from left) was re-elected to a second term on Nov. 3. Seen with him on election night is the marketing team that coordinated his campaign: from left, Janet Casey, president of West Springfield-based Marketing Doctor; David Horgan, president of Horgan Associates; and Ed Brown, a videographer with New York Sound and Motion.

    Human Center

    The Center for Human Development staged its annual meeting on Nov. 10 at the MassMutual Center. Attendees heard updates on CHD programs, watched the presentation of several awards, and heard addresses from Health New England CEO Peter Straley and Republican gubernatorial candidate Charles Baker, former CEO of Harvard Pilgrim Health Care, on the subject of national health care reform. At left, Straley (left) chats with Hank Drapalski, CHD’s vice president of Development. Above, the Rick Moriarty Volunteer of the Year Award is presented to Gene Sullivan, right, a CASA (Court Appointed Special Advocates) volunteer. With him is Keith Hedlund (left), director of the CASA program, and Alex Medina, Sullivan’s CASA child.


    Having a Ball

    More than 400 people gathered at the Sheraton in downtown Springfield on Nov. 14 for the annual Brights Night Ball, staged to support the Bright Nights holiday lighting display in Forest Park and other events staged by the Spirit of Springfield. The ball featured a social hour, several speeches by area elected officials, dinner, dancing, and an auction with prizes ranging from commercial time on local TV stations to a guitar signed by Bruce Springsteen and members of the E Street Band. Clockwise from left, Judy Matt, president of the Spirit of Springfield, with David Cuoco, left, and Joseph Tobin, longtime Springfield Parks Department employees who have led work to install the Bright Nights displays for 15 years; Roger Crandall, COO of MassMutual and chairman of the Bright Nights Ball, addresses the crowd; from the PeoplesBank table are, from left, President Doug Bowen, his wife, Anna, Susan Wilson, vice president of Marketing and Communications for the bank, and her husband, Craig; Health New England President Peter Straley with his wife, Donna Ross, an executive with Baystate Health; and Mark Tolosky, president and CEO of Baystate Health.


    Ten Points About : Expansion of family and Medical Leave Act Coverage

    By AMY B. ROYAL, Esq.

    1. On Oct. 28, President Obama signed the National Defense Authorization Act which included provisions that further expanded the Family and Medical Leave Act (FMLA) for military families.

    2. FMLA leave to military families was first extended in January 2008 in another defense authorization bill that President Bush signed into law.
    3. That law amended the FMLA by creating two entirely new categories of FMLA leave specifically for military families.
    4. The first category of military family leave created by the January 2008 amendment allowed employees to take up to 12 weeks of FMLA leave in a 12-month period if they experienced a ‘qualifying exigency’ when their covered family member was on, or called up to, active duty in the Reserves or National Guard.

    5. With the recent expansion, employees who have a covered family member on active duty in the armed forces are now entitled to up to 12 weeks of leave for a qualifying exigency.

    6. Qualifying exigencies are defined in the regulations issued by the Department of Labor earlier this year as follows: short-notice deployment, military events and related activities, child care and school activities, financial and legal arrangements, counseling sessions, rest and recuperation, and post-deployment activities.
    7. The second category of military family leave created by the January 2008 amendment allowed employees to take up to 26 weeks of FMLA leave to care for a service member who has a serious illness or injury incurred in the line of duty for which the service member is undergoing medical treatment, recuperation, or therapy.
    8. With the recent expansion, employees are now entitled to take 26 weeks of FMLA leave to care for a veteran of the armed forces, including the National Guard or Reserves, who is undergoing medical treatment or therapy for or recuperating from a serious injury or illness at any time during the five-year period preceding the date of treatment, therapy, or recuperation. Previously, this type of leave did not allow family members to care for a service member whose injury or illness manifested itself sometime after the service member became a veteran.
    9. The FMLA expansions are effective immediately.

    10 Employers should amend their FMLA policies to reflect these expansions.

    Amy B. Royal, Esq. is a partner in the law firm of Royal & Klimczuk, LLC. She specializes in management-side labor and employment law;
    (413) 586-2288; [email protected]

    Keep the Engine of Small Business Humming

    In 1982 as an MBA student at The Ohio State University, I read Dr. Michael Porter’s book Competitive Strategies. Fast-forward to the mid-1990s when I attended Porter’s presentation in Springfield about the importance of businesses locating in the urban core. My then-business partner and I took the bait. Within a year, TSM Design was located in the heart of downtown on Bridge Street, where we remain today.

    Recently I received an e-mail from Porter’s brainchild, the Initiative for a Competitive Inner City. The ICIC’s mission is “to promote economic prosperity in America’s inner cities through private-sector engagement that leads to jobs, income, and wealth creation for local residents.” Given my long history with Porter, I decided to attend the ICIC summit in Washington, D.C. titled “Growing Businesses in the Inner City: Building Capacity and Creating Impact.”

    Featured at the two-day event was Porter’s presentation of 10 years of data collected among 600 successful urban enterprises. He focused on the following factors influencing the growth of inner-city firms: financing, the inner-city business environment, company revenue sources, and leadership and human capital.

    Some of Porter’s findings are as you might expect. Inner-city firms generally use personal assets for startup funds and bank loans for growth. The vast majority (76%) indicate limited access to growth capital. Yet these financing statistics yield an interestingly low failure rate among the studied inner-city businesses.

    Among the sectors represented, 3% of distributors, 3% of manufacturers, and 4% of service businesses have closed their doors during the 10-year study. None of the retailers have gone out of business.

    Included in the summit were presentations from Karen Mills, the administrator of the U.S. Small Business Administration, speaking about national policy and the Obama administration’s commitment to growing the small business sector, and Rob Walsh, commissioner of the NYC Department of Small Business Services, who spoke in detail about best practices of a business-friendly city government.

    Of particular interest to me was a panel discussion on how large companies use their procurement dollars to grow the inner-city economy, and a case study involving New England Blue Cross Blue Shield and one its small local vendors. BCBS and the vendor split the cost of hiring NextStreet Financial to mentor and grow the vendor into a more robust supplier. The vendor happens to be a communications firm specializing in diverse audiences. The net result is a vendor with increased capacity with more opportunities — both within BCBS as well as other companies.

    All in all, this summit was personally affirming to me as a small-business owner in Springfield. Intuitively I’ve known we made the right decision 14 years ago to move the business out of the suburbs and into the center of the city. There are some discernable fringe benefits. For one, a downtown address has considerably more gravitas than a suburban one. Visibility is another factor. I can walk down the street and see dozens of current or potential clients and colleagues. Also, most of my civic involvements are within walking distance from my office. Lunchtime also yields far more interesting menu options.

    The conference raised the bar for my expectations of the opportunities for my business and those of my peers. My eyes were opened to what other cities are doing to increase opportunities for small businesses. Even more importantly, I now know there are large corporations that both walk the walk as well as talk the economic-development talk. They make a point of doing business with local small businesses.

    One eye-opening fact presented during the conference: 70% of all U.S. workers either work for or own a small business. The SBA definition of a small business is fewer than 500 employees. In Springfield, there are only 35 employers with more than 500 employees. So the thousands of businesses that comprise this city’s economy are small, like mine. If Springfield is going to regain its economic health, it’s time we develop a comprehensive strategy to keep this dynamic little engine going.

    Nancy Urbchat is owner of Springfield-based TSM Design; (413) 731-7600.


    Organizers of the Clean Energy Connections Conference and Opportunity Fair staged the second edition of the still-fledgling event earlier this month. The conference provided job seekers with an opportunity to see what the field has to offer, and for business owners to recruit new talent. But for most attendees, the event offered a chance to see, hear, and experience the size and diversity of the region’s ‘green’ sector, and to ponder what the future might hold for this intriguing industry

    On a Tuesday earlier this month at the MassMutual Center, you could find everything from energy-saving window shades to solar power providers; from green energy consultants to pioneering biofuel technology.

    The Clean Energy Connections Conference and Opportunity Fair is in its second year. “Last year was a bit of an experiment, and folks didn’t know what to expect,” said Loren Walker, associate director of Research Liaison and Development at UMass Amherst. “This year it was affirmed that what we’ve organized is truly unique. It’s way more than a job fair. Many connections were made between businesses, between students and colleges, and between businesses and future employees.”

    Walker is the associate director in the Office of Research, and is one of the organizers of the event. This year, he said, the goals for the conference were to create those connections in the business and research communities to advance the ‘green,’ clean-energy technology sector in the region.

    The event was staged on a weekday this year in the hopes of increasing a corporate role at the convention, Walker said. “By keeping it inclusive, for educators, financiers, business leaders and owners, community leaders, and public agencies, we increase the chances that we’ll have an impact on developing the pipeline of trained workers, placing workers locally, and growing clean-energy-related businesses in the Commonwealth that will be socially responsible.”

    Walking through the exhibition hall, the broad scope of the conference was evident: schools, architectural firms, biofuel industries, banks, environmental entrepreneurs, and consulting firms, all representing a commitment to a solid green sector for this region, were in attendance.

    “The clean-energy sector is going to grow by these folks coming together,” Walker continued.  “The green economy touches so many issues — social justice, business development, technology, workforce development. It’s still so broad, but the communication needs to be there, or else we’ll end up with a fragmented economy.”

    BusinessWest talked with some of the event’s exhibitors, some familiar names and some not-so-familiar, to gain some perspective on just where the region’s green sector is, and where a diverse group of players think it can go.

    Onward and Upward

    When JMP Environmental Consulting opened a second office in Springfield, having originally operated in Ware, the move was a perfect example of the role Western Mass. plays for the green sector.

    Exhibiting at the conference for the first time, owner John Prenosil said that his hopes were to raise awareness for land-development issues. “Our goal is to educate and guide our clients interested in alternative energy sources as they relate to site selection,” he told BusinessWest.

    Springfield is important as the largest city in the region, and he said that his decision to locate another office here was based on a lack of others in his field.

    “In our experience, people seem to be more receptive to alternative energy sources and green alternatives,” he said. ”As a business, we strive to be as green as we can. We are involved with more residential and commercial projects that involve alternative energy and greener development techniques this year than in the past, and hope to see this trend continue and increase in the future.”

    Around the corner, Chris Kilfoyle welcomed people to the booth representing his company, Berkshire Photovoltaic Services. Admiring the crowds of students, fellow exhibitors, and interested visitors, he spoke highly of the gathered talent.

    “Number one, we want to make sure that companies who may have come to the conference looking at the region as a place to brand their manufacturing facility, or their service industry, can see that there’s an active educational component here as well as a network of professionals already in place,” he said. “The industry can grow here, and we all would love to be part of that growth.”

    Already a recognized leader in the region’s solar-energy field, Kilfoyle said he did get some good leads for new business at the conference, but the issues the gathering raised were of far greater significance.

    Kilfoyle had high marks for the organizers at UMass, citing them as leaders for the green sectors in the area. He was impressed by the students he’d encountered, whom he spoke of as giving renewed optimism for the future. While the conference gives business owners a chance to look at the region for its role in green initiatives, it can also give rise to enthusiasm for the succeeding generations destined for roles within that economy.

    “For many students,” he said, “we gave them a pep talk. They are asking about what courses of study should they be looking at, what is the job growth, what are the job prospects. We collected résumés from people who are unemployed but highly qualified in electronics and electricity, and in that regard, it’s even better for us than making contacts to sell systems. The main impetus of the conference is to show, ‘hey, there are companies out there that will be hiring, that are hiring, and this is the place to meet them.’”

    Map Quest

    John Laux is the president and CEO of Greendustry Park of Florence, and the creator of the Green Gateway Guides Map, an all-in-one look at the green industry for the four counties of Western Mass. While the Greendustry Park had been a contributor at the earlier convention, the map made its debut this year.

    The map represents a strategic step forward in identifying all things and organizations green, looking at agriculture, building trades, education, energy systems and services, environmental services, manufacturing, organized groups, retail, and support services. Laux said that there had been many other compendiums and guides out there, but usually there is a charge for inclusion in such information banks.

    “We found that there are many Web sites with a smattering of these different companies in the region,” he explained, “but there isn’t one clearinghouse of data, because everyone’s model is about how to make money off of selling positions and listings.

    “That wasn’t accessible to the public or anyone doing research in the region or outside of the region,” he continued. “So we decided that what we needed to do was to build a model that wasn’t money-centric, that was built on a framework of neutrality. We’re not looking for money, we’re looking to be able to put this information together for anyone who needs it.”

    According to Laux, an important aspect in creating the map is to raise awareness of what is green, and how that could be applied to one’s daily life. The map itemizes businesses and services that are green by their nature, offering environmentally minded products, or are green behind the scenes, with practices, systems, or policies that situate them as proponents of the green ethos.

    What Laux plans to do next is use the data compiled to create baseline metrics for the local green community. “What it does,” he explained, “is measure companies based on performance, so that people get rated, above and beyond standard business practices. What we are trying to do is to create a neutral metric, to encourage companies to strive for added status.”

    As one of those people showcasing the green industry from within, Laux said the conference this year highlighted the emergence of a consciousness for the sector outside the region. “Last year the conference was very centered on Western Mass. to show everything that was going on here. This year, the conference pulled in a lot of people from the east.”

    Most important, he said, is a growing recognition of the area for all that it offers. UMass has pioneering laboratories working on biofuels, as reported widely in the media, but also groundbreaking work on agriculture for that energy technology, as well as one of the more important wind-energy laboratories in the world. “It’s been there for 20-plus years. Their technology is being used throughout the world for wind technology, but who really knows that?” he asked.

    “I gave a presentation to the Pioneer Valley Planning Commission recently,” he continued. “I’m on the green strategy group there, and went over all the data that we had compiled for the map, and they were fascinated by it. Their response was, ‘we knew things were going on, but not at this level.’ It really gave them a sense; you could almost see them bubbling over with, ‘wow, this is really happening.’

    “In trying to figure out what ‘green’ is,” he concluded, “you need to stop and look at the data that we’ve compiled, and know that this region is way up there. It was an awakening for the PVPC, and that’s what this conference is about. We’re trying to get the word out that it is happening here, and we are players. And we want the rest of the state and beyond to know that.”