Five Defenses to Contractual Waivers of Subrogation

Note:  For my March 2014 Subrogation Newsletter Alert, I’m posting the article which The Subrogator magazine published in its Winter 2014 issue regarding waiver of subrogation language in construction contracts, and defenses you should consider.

"Nothing is more frustrating than having a “slam dunk” property subrogation claim, only to find out that your insured’s contract with the contractor who caused the property loss contains “waiver of subrogation” language. The law varies among jurisdictions but, generally speaking courts have frequently upheld such waivers..." Read full pdf article

Divided New York High Court Finds 6-Year Statute of Limitations Against Contractors

In most New York subrogation cases, the statute of limitations runs three years from the date of loss (i.e., the date of the fire, water damage, automobile accident, etc.).  This “three years from date of loss” rule governs in product liability cases against the makers and distributors of defective products, for example.

New York courts have traditionally treated lawsuits against contractors and architects differently than product liability cases, for purposes of the statute of limitations. The law has been clear for years that the statute of limitations for suits against contractors/architects starts to run from the date the “work is substantially completed,” not from the date of loss.  In cases involving the construction of houses, several courts have held that the work is deemed “completed” when the municipality issues a Certificate of Occupancy, ostensibly certifying that the house is safe to be occupied.


Court Reviews New York Products Liability Law

Where a defective product causes a loss, you traditionally had to prove one of three things in New York State:  (a) manufacturing defect (i.e., the particular unit that caused the loss was a “bad apple” that deviated from the rest of the units); (b) design defect (i.e., the whole batch of units contained a design flaw that made them all dangerous; (c) failure to warn (i.e., the product would have been safe to use had it been accompanied by better instructions for its use and/or clearer warnings about dangers accompanying use of the product). Generally speaking, a “manufacturing defect” is easier to prove since you are only claiming that the particular product that caused your loss was deficient and you need not show that all products were poorly designed.


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