Additional Insured Status Can Arise Indirectly by Lease (or other Written Contract)

Decisions in two separate courts have come to the same conclusion: additional insured status can be conferred via (1) a contract – which was a lease, in each of these cases – requiring Party A to be designated as an additional insured on Party B’s insurance policy, and (2) Party B’s insurance policy endorsement calling for additional insured status for others when required by contracts that Party B has entered into. This may seem obvious to many industry practitioners, but parties and carriers still argue otherwise from time to time.

Illinois Appellate Court. This was a dispute between a crane rental company and the insurance carrier for the sub who leased the crane, about defense of a personal injury claim. A worker was injured when he was struck by a crane jib that had become detached.

The crane rental company, Imperial, provided a crane and operator. The leasing agreement called for the crane operator to act as “agent, servant and employee” of the sub, K&S, unless K&S timely objected to the operator. The leasing agreement also required that K&S purchase primary noncontributory commercial general liability insurance prior to the crane's arrival on the job site and that Imperial be included as an additional insured.

The K&S insurance policy included an additional insured endorsement providing that another entity would be an additional insured “where required by contract.” Further, other policy terms included that additional insured status would arise “with respect to liability caused, in whole or in part, by 'your work' for that insured which is performed by you or by those acting on your behalf,” and also that “your work” included “Work or operations performed by you or on your behalf.”

Since the lease called for Imperial to be named as an additional insured, and since the work in question arose from operation of the crane performing work on behalf of K&S, Imperial was thus an additional insured under the K&S policy with Crum. The case is Crum & Forster Specialty Ins. Co. v. Imperial Crane Servs., 2017 Ill. App. Unpub. LEXIS 1960 (Sept. 22, 2017) (LEXIS subscription required).

Pennsylvania Federal District Court. This involved a claim by a landlord’s insurance carrier seeking contribution from the tenant’s insurance carrier, for defense of a personal injury claim. The lease included the sentence: “Tenant and Landlord, any mortgagee of the Premises, and other parties in interest as shall be designated by Landlord as additional insureds.” The sentence was incomplete, which gave the tenant’s carrier a toehold to argue that the lease did not include a definitive obligation. But the court looked at the intent of the paragraph and concluded otherwise.

The tenant’s policy provided that “Any persons or organizations" that the tenant "agreed in a written contract or agreement to name as an insured" would be an additional insured under the policy. With the lease language as construed by the court, the tenant had agreed via written contract to include the landlord as an additional insured, and thus the landlord’s carrier could compel participation or contribution in the defense from the tenant’s carrier. The case is Nautilus Ins. Co. v. Westfield Ins. Co., 2017 U.S. Dist. LEXIS 158480 (Sept. 27, 2017) (LEXIS subscription required).

These cases confirm the expectations of most parties, that additional insured status can be achieved and additional insured parties designated without having to specify entity names.

About Stan Martin

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Stan Martin holds a law degree and an undergraduate degree in architecture. He has been involved with the construction industry for more than 45 years, working in construction prior to law school and beginning his construction law practice. Over the course of his career, he has served on boards and committees for organizations including the Associated General Contractors of Massachusetts, the Boston Society of Architects, and the Massachusetts Building Congress.

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