The federal district court determined that the insurer must defend the additional insured even though it was premature to determine whether there was also a duty to indemnify. Liberty Mutual. Fire Ins. Co. v. Acuity Mut. Inx. Co., 2025 U.S. Dist. LEXIS 121429 (D. Nev. June 26, 2025).

    Royal Refrigeration was a heating, air conditioning, and refrigeration contractor that entered into an Independent Contractor Agreement (ICA) with YESCO, LLC. The agreement stated that it would "serve as a master agreement for all projects which YESCO engaged [Royal] for a period of two years . . ."  Pursuant to the ICA, Royal obtained workers' compensation, comprehensive general liability, personal injury, and excess umbrella coverage from Acuity. YESCO was listed as an additional insured under certificates issued by Acuity.

    Royal sent its employee Richard Kline to install swamp coolers at a YESCO-owned building. Kline fell through the building's roof and was seriously injured. He sued YESCO and various Doe defendants, alleging that he had climbed onto the roof at YESCO's request to perform work as a Royal employee. The roof collapsed, and he crashed onto a table below, suffering bodily injury. 

    Liberty was YESCO's general liability carrier. It tendered Kline's pre-suit demand against YESCO to Royal's carrier, Acuity. Liberty contended that Royal agreed in the ICA to indemnify and defend YESCO from such a claim and that YESCO was an additional insured under Royal's policy with Acuity. Acuity declined to defend or indemnify because to be a additional insured under Royal's policy, YESCO must 'have agreed in writing to a contract or agreement" that YESCO be so named. Because the ICA had just a two-year term that expired more than a year before Kline's accident, there was not agreement at the relevant time. Therefore, YESCO was not an additional insured under Royal's Acuity policy for Kline's claim. 

    Liberty filed suit for declaratory relief.  Cross motions for summary judgment were filed. The court first noted that there were tow parts in the "additional insured" definition found in the policy's endorsement of the Acuity's policy. The first half of the provision stated that an additional insured included "[a]ny . . . organization for whom you are performing operations when you and such organisation have agreed in writing in a contract or agreement that such. . . organization be added as an additional insured on your policy . . ." The second half narrowed or clarified the additional insured coverage by stating that it only applied to such damages "caused . . . by"  Royal's "acts or omissions" or ""[t]he acts or omissions of those acting on [Royal's] behalf."

    Acuity argued that the ICA terminated by its express terms more than a year before Kline's accident. The two year termination date ended any continuing obligations in the ICA. But the contested provision did not say that the ICA terminated after two years; it said that the parties understood that the ICA "will serve as a master agreement for all projects which VESCO engages [Royal] for a period of two years." Another provision in the ICA addressed the parties' continuing obligations after the termination of the ICA.

    These provisions were entirely harmonious; the ICA may have terminated before Kline's accident, but Royal's contractual obligation to make YESCO an additional insured in its CGL policy continued to apply to any services that Royal provided YESCO after that term. Therefore, when Royal sent Kline to install swamp coolers for YESCO, there was an operative agreement in writing that YESCO be added as an additional insured on Royal's CGL policy for that work. There was no genuine dispute that the first half of the "additional insured" definition in the Acuity policy was satisfied here.

    The complaint gave rise to the potential that additional-insured coverage existed. That potential triggered Acuity's duty to defend YESCO against Kine's suit under Nevada law. Liberty Mutual was entitled to summary judgment in its favor on Acuity's duty to defend theory.     

    The court further determined that it was premature to decide Acuity's duty to indemnify claim and neither side could prevail on this issue in their motions for summary judgment.