Federal District Court Judge Amos Mazzant recently ruled on competing motions for summary judgment from two insurers over the duties owed to an additional insured.  In Employers Mutual Casualty Company v. Amerisure Insurance Company, No. 4:18-CV-00330, 2019 WL 3717634, (E.D.Tex., August 7, 2019), two insurers disputed who must assume the defense of an underlying personal injury lawsuit.

As part of the construction of a church, a general contractor hired a subcontractor to perform drywall work. The subcontractor entered into an agreement that required them to defend and indemnify the general contractor against certain claims and procure liability insurance that named the general contractor as an “additional insured.”

The subcontractor’s insurer based its arguments on the general contractor’s status as an additional insured.  The Policy contained a Texas Contractor’s Blanket Additional Insured Endorsement that enabled the subcontractor to add additional insured parties to its policy. There was no dispute that the general contractor was an additional insured.  However, the subcontractor’s insurer noted that its duty to defend an additional insured is limited and, in this case, was not primary because of the other insurance provisions of the Policy.  Further, because both policies contained other insurance provisions that were mutually repugnant, the subcontractor’s insurer argued defense costs should be split on a pro-rata basis.  The general contractor’s insurer argued that the indemnity provision shifted exposure for the underlying suit wholly to the subcontractor, making the subcontractor’s insurer liable for all defense costs.  The subcontractor’s insurer argued that the underlying suit did not trigger the indemnity provision.

The court decided it must first determine whether the underlying suit triggered the indemnity provision.  After examining the language of the indemnity provision, the court concluded that the indemnity provision was not triggered because the injury did not arise or result from the subcontractor’s work and was not caused in whole or in part by the subcontractor or its employees.  Having determined that the indemnity obligations were not triggered, the court granted the subcontractor insurer’s motion and that both insurers were obligated to split the defense costs on a pro-rata basis.

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