Does a policy's Blanket Additional Insured Endorsement bar primary coverage for an additional insured with a policy of its own? Although the court answered yes in Kummer Enter., Inc. v. HBE Corp., No. 1:09-cv-109, 2010 U.S. Dist. LEXIS 6403 (W.D. Mich. Jan. 27, 2010), it nevertheless determined the additional insured was entitled to a defense under the policy.
Plaintiff was awarded a general contract to build an addition to a medical building. WPM, Inc. was retained as a subcontractor to excavate the basement for the addition. Under the subcontract, WPM agreed to indemnify Plaintiff for WPM's failure to maintain safe working conditions. WPM was also required to obtain comprehensive general liability insurance naming Plaintiff as an "additional insured."
Subsequently, a WPM employee was injured. The employee sued Plaintiff, who filed a third-party complaint against WPM seeking indemnification.
After coverage for defense and indemnity was denied, Plaintiff sued the insurer. The court agreed Plaintiff was an additional insured under the policy. The policy's Blanket Additional Insured Endorsement, however, limited coverage under two provisions: (1) the "Your Negligence" provision contained in Section B (1); and (2) the "Excess Insurance" provision contained in Section C (2).
The Section B (1) provision stated a person or organization was an additional insured "solely for liability due to your negligence specifically resulting from 'your work' for the additional insured." In the underlying suit, there was a possibility that Plaintiff could be held liable for the negligence of WPM. For example, the jury could determine that WPM's assumed responsibility for the safety of its workers, but still assess liability against Plaintiff. Therefore, the B (1) limitation did not preclude Plaintiff's summary judgment claim for a defense.
The Section C (2) provision stated the insurance was excess of any other policy held by the additional insured unless a written agreement specifically required that this policy was a primary policy. In a majority of jurisdictions, this provision required that the written agreement explicitly state that an additional insured's coverage would be primary before extending coverage to the additional insured. Here, neither the subcontract, the certificate of insurance, nor any other document satisfied this requirement. Consequently, the insurance available to Plaintiff as an additional insured was excess of any other policy Plaintiff might have.
Nevertheless, there was no evidence that other policies existed which could provide primary coverage for the employee's claim. Therefore, the C (2) limitation left open the possibility that damages assessed against Plaintiff in the underlying suit would be covered by the policy. Again, Plaintiff was entitled to summary judgment on its claim for a defense.
