Hunton Insurance Recovery Blog

The Seventh Circuit affirmed a ruling from the Northern District of Illinois that a subcontractor’s insurer must defend the general contractor in a negligence suit brought by an employee of the subcontractor for injuries suffered on the job.

A Massachusetts intermediate appellate court recently found no coverage for a general contractor listed as an additional insured under a subcontractor’s general liability insurance policy. The general contractor sought coverage for a negligence action brought by an employee of the subcontractor regarding workplace injuries.

In a recent decision, the Maryland Court of Special Appeals reiterated that the duty to defend broadly requires a liability insurer to defend an entire lawsuit against its insured, even where only some of the allegations are potentially covered.  The court further held that the insured has no obligation to apportion defense costs among multiple implicated policies.  The decision, Selective Way Insurance Company v. Nationwide Property and Casualty Insurance Company, et al., can be found here.

In a ruling earlier this month, an Oklahoma appellate court ruled in JP Energy Marketing LLC v. Commerce and Industry Insurance Co., No. 115285, 2017 WL 7903997 (Okla. Civ. App. March 01, 2018), that additional insured status would be afforded to a project owner despite the absence of a direct contract between the project owner and the subcontractor requiring that the project owner be named as an additional insured, finding that a direct contract was not required where the insurance policies did not use the words “between” or “direct” to describe the level of contractual relationship that would give rise to additional insured status.  The decision underscores the importance of carefully evaluating the language used in “additional insured” provisions, which can vary widely in scope and effect.

Maryland’s Court of Special Appeals recently ruled in James G. Davis Construction Corporation v. Erie Insurance Exchange¹ that a subcontractor’s insurer was obligated to defend the general contractor against allegations that it was negligent in its supervision of the subcontractor. In doing so, the court reversed the trial court’s ruling that the general contractor was covered only for claims of vicarious liability for the subcontractor’s actions.

The Appellate Division of the Superior Court of New Jersey recently ruled in Cypress Point Condominium Association, Inc. v. Adria Towers, L.L.C.¹ that consequential damages to the common area and units of a condominium complex caused by a subcontractor’s defective work constituted “property damage” and an “occurrence” under the building developer’s standard-form CGL policies, even though the policies were unlikely to cover direct damages like replacement costs. The case serves as a reminder that not all damages are treated alike by insurance policies, and policyholders therefore should not assume that an adverse determination as to one type of loss will apply to all resulting loss.