Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:A&B Builders, Inc. was hired to erect steel for construction on premises owned by ATOFINA Petrochemicals Inc. (Fina). An A&B employee, Larry Don Wisdom, was injured unloading steel for A&B on Fina’s property. When Wisdom sued Fina and others for negligence, Fina requested coverage and a defense as an additional insured under A&B’s comprehensive general liability policy. Although the trial court granted summary judgment in Fina’s favor, the court of appeals determined that Fina was not an additional insured at the time of the accident, and further, that coverage for Wisdom’s claims against Fina was barred by a policy exclusion. HOLDING:The court reverses the court of appeals’ judgment and reinstates the trial court’s judgment that Fina was an additional insured at the time of the accident and its claims were not barred by the exclusion in the policy. ( Fina was an additional insured under the additional insured endorsement at the time of the accident. Fina orally accepted A&B’s written proposal on August 12; thus, as of that date, A&B and Fina had a written contract that required A&B to provide insurance covering the Fina property. A&B’s agreement to furnish insurance to Fina was sufficiently definite to create additional insured status for Fina. Although it did not specify the type of insurance coverage or policy limits, the construction contract that stated A&B’s obligation to “furnish . . . insurance” contained all of the material terms of the contract. Because Fina and A&B had a standing requirement that Fina was to be added to A&B’s existing policy, the coverage and policy limits were provided by the existing policy. Thus, the contract was sufficiently definite for the parties to understand their obligations. The court of appeals erred by imposing unstated requirements � that the contract provide the types of coverage and the policy limits � as a bar to coverage. The additional insured endorsement in the policy does not specifically require the written construction contract to state the amount or type of coverage, only the name of the person or organization to be included as an additional insured. The additional insured endorsement states: “The limits of liability for the additional insured are those specified in the written contract, or agreement, or in this policy, whichever is less.” Thus, if the construction contract fails to set out a different amount of coverage, the additional insured coverage is limited to the policy limits. Purchase orders issued on August 22 and 25 do not supersede the commitment to furnish insurance in the initial written proposal. The purchase orders do not override the original insurance commitment because the orders are consistent with the original construction contract. Although the prudent practice is to obtain a certificate of insurance before beginning work under the contract, the delay in issuance of the certificate in this case does not preclude Fina from being an additional insured. Nothing in the record indicates that Fina and A&B attempted to manufacture coverage after the accident. In addition, nothing in the liability policy indicates that issuance of a certificate is a condition precedent to Fina’s becoming an additional insured. In construing contracts, the terms will generally be construed as a covenant unless the contract contains specific conditional language. Here, the policy contains no such language, and the additional insured endorsement did not require the certificate to issue prior to the commencement of work or prior to loss. A&B’s representative requested a certificate of insurance on August 12, before the accident, but the certificate was not issued until August 18, four days after the accident. The certificate itself states that it “is issued as a matter of information only and confers no rights,” and Continental’s representative admitted the certificate date does not necessarily affect coverage. The court holds that the issuance of the certificate does not affect Fina’s status as an additional insured and that Fina was an additional insured at the time of the accident. The claims against Fina were not excluded under the policy. Paragraph 1 of the endorsement extends broad coverage to Fina on all matters arising out of A&B’s work. Fina’s construction of Paragraph 2 as excluding Fina’s sole negligence is reasonable. Continental’s interpretation that the exclusion bars all coverage when any negligence on the part of the premises owner is pleaded, unless the owner’s responsibility is based solely on vicarious liability for the acts of the contractor, would render coverage under the endorsement largely illusory. Continental argues the claims against Fina and any resulting liability arose solely out of Fina’s acts and omissions. Despite the asserted legal theories, the pleadings contain factual allegations of injuries caused by A&B’s negligence while working at Fina’s facility allegations which are covered by the policy. OPINION:Per curiam.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.