Product Update

Appellate Court Rulings on the Scope of Standard Additional Insured Endorsements in Commercial Liability Insurance

This Commercial Liability Insurance release continues our monitoring of appellate rulings on the scope of standard additional insured endorsements.

A contentious issue continues to be the availability of coverage to additional insureds involved in third-party-over actions—suits brought by injured workers against parties that are additional insureds under the named insured employer's CGL policy. In such actions, there can be questions about the triggering of coverage under standard additional insured language since such coverage applies only when the bodily injury in question is caused at least partly by an act or omission of the named insured employer. Under workers compensation systems, there will almost never be allegations of negligence against the employer, who is shielded from such claims under the exclusive remedy doctrine. Without allegations of a causal connection between the named insured employer's actions and the injury that generates the claim against the additional insured, some insurers have resisted acknowledging the applicability of coverage under Additional Insured—Owners, Lessees or Contractors—Scheduled Person or Organization (CG 20 10) or other standard additional insured endorsements. An eventual finding of coverage in these cases usually depends on the degree to which a court is constrained to look only at the allegations made against the additional insured and the language of the insurance policy—within the "eight corners" of the two relevant documents. When such constraints are in place, courts typically will not see a trigger of coverage for the additional insured. By contrast, where courts are free to look beyond the suit allegations and the policy language to determine causality, coverage is often upheld.

Two recent court decisions—one from Pennsylvania and one from the US Seventh Circuit applying Illinois law—illustrate how courts look to extrinsic facts or rely on an understanding of the way in which the workers compensation system affects work-related injury claims against third parties to determine coverage for those third parties. The cases—Scottsdale Ins. Co. v. Columbia Ins. Grp., Inc., 2020 U.S. App. LEXIS 27211 (7th Cir. 2020) and Precision Underground Pipe Servs. v. Penn Nat'l Mut. Cas., 225 A.3d 1127 (Pa. 2019)—are reported in our analysis of endorsement CG 20 10.