The interpretation of the additional insured endorsement was key to determining coverage in Lancaster v. Ferrell Paving, Inc., 2011 Tenn. App. LEXIS 507 (Tenn. Ct. App. Sept. 20, 2011).

   Ferrell Paving, Inc. used a warehouse to store its construction materials. Ferrell employed Imperial Guard Service, Inc. to provide security services for the warehouse. One evening, an Imperial Guard employee was shot by intruders while he was on duty. The guard sued Ferrell, alleging negligence in failing to protect him.

   Ferrell believed it was an additional insured under Imperial Guard's policy, so it tendered its defense to Everest Indemnity Insurance Company. Everest denied coverage, contending Ferrell was not an additional insured under an endorsement reading,

Who is An Insured is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of your ongoing operations performed for that insured.

The Schedule did not name a person or organization, but stated, "BLANKET WHERE REQUIRED BY CONTRACT."

   Imperial Guard and Ferrell had entered a written contract, but it did not mention additional insured status. Pursuant to an oral agreement, however, Imperial Guard had added Ferrell as an additional insured under the endorsement. The trial court concluded that Ferrell was an additional insured, but that it was not covered because it was allegedly negligent.

   The appellate court reversed. Everest argued the endorsement only provided coverage to the purported additional insured for vicarious liability that arose out of the ongoing operations of the insured. Therefore, the additional insured was not covered for its own negligence. The court, however, agreed with the majority view.Coverage for an additional insured "with respect to liability arising out of [the named insured's] ongoing operations performed for [the additional] insured" meant the additional insured's coverage was not limited to instances of vicarious liability for the negligence of the named insured.

   Here, Ferrell's alleged liability for the employee's injury arose out of Imperial Guard's ongoing operations performed for Ferrell. Therefore, Ferrell was covered by the additional insured endorsement.