A policy's "other insurance" clause and a contractual indemnity provision were at the root for determining which of two insurers had to cover for injuries at a construction site. Valley Forge Ins. Co. v. Zurich Am. Ins. Co., 2011 U.S.Dist. LEXIS 76061 (N.D. Calif. July 14, 2011).

   Hathaway was the general contractor at a demolition and construction project. Hathaway was insured by Zurich. Reinhardt Roofing was the roofing subcontractor. Reinhardt was insured by Valley Forge under a policy which named Hathaway as an additional insured. The subcontract also required Reinhardt to indemnify Hathaway for acts or omissions arising from Reinhardt's work unless Hathaway was solely negligent.

   Four of Reinhardt's workers were injured when a canopy roof on which they were working collapsed. At the time of the accident, Hathaway's on-site supervisor was inspecting a gap in the canopy roof, but did not order Reinhardt's workers to stop working. 

   The four injured workers sued Hathaway. Valley Forge defended and paid for the settlement. The Zurich policy stated if any other policy covered Hathaway as an additional insured, then Zurich's policy would be excess over the other insurance. Therefore, Zurich refused to participate in the defense or settlement of the underlying case.

   Valley Forge filed suit against Zurich seeking reimbursement.  Cross motions for summary judgment were denied.

   When Zurich moved for reconsideration, Valley Forge contended Zurich's policy was not a true excess policy, but a primary policy with an excess only "other insurance clause." The Court agreed.  An "other insurance" clause attempted to reduce the insurer's liability under the policy to the extent another policy covered the same risk.  A policy with an excess only "other insurance clause" was a primary policy, not a true excess or secondary insurance.

   Genuine issues of fact remained, however, with regard to whether Reinhardt was solely negligent and therefore whether Zurich's "other insurance clause" would contractually preclude recovery by Valley Forge. If the terms of the indemnification provision were satisfied, then the indemnification, not the insurance policies, would determine whether Valley Forge could recover from Zurich.  Genuine issues of fact existed with regard to the negligence of Hathaway as general contractor, Reinhardt as roofing subcontractor, and a third party, the architect of the project.

   In summary, if Zurich established that the indemnification agreement applied, Valley Forge could not recover from Zurich. If Zurich was unable to show the accident was connected with Reinhardt's work, the indemnification provision would not apply and the insurance policies would take effect.