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Sub’s Certificate of Insurance Insufficient to Garner Duty to Defend/Indemnify General Contractor

July 29, 2019

Johnson & Bell Insurance Coverage Shareholder, Glenn F. Fencl, won a coverage dispute on behalf of his insurance carrier client.  In this case, Johnson & Bell’s client had issued an insurance policy to a subcontractor at a construction jobsite. An employee of the subcontractor claimed he had been injured at the construction site and sued the general contractor. The general contractor (GC) tendered the matter to the subcontractor and its insurer, Johnson & Bell’s client. The subcontractor and GC had a written contract stating the subcontractor must obtain a certificate of insurance listing the GC as an additional insured on its workman compensation and general liability insurance policies.  The contract also stated that no payment would be issued to the subcontractor until the insurance was received.

The subcontractor, through its insurance broker, obtained a certificate of insurance and sent it to the general contractor. However, Johnson & Bell’s client’s insurance policy language specified that in order for an entity to qualify as an additional insured a written contract must exist “that such person or organization be added as an additional insured on your policy.” Mr. Fencl argued that the agreement to name a general contractor as an additional insured on a certificate of insurance was not sufficient, particularly where the certificate specifically stated that it was “issued as a matter of information only”, that it “confers no rights upon the certificate holder” and that it does “not amend, extend or alter the coverage afforded by the policies”.  He also argued that the contract did not incorporate the certificate of insurance as part of the contract.

The court agreed that the policy language and the language of the contract between the general contractor and subcontractor were unambiguous, and held that the general contractor did not qualify as an additional insured because the language in the contract did not satisfy the policy requirement that an agreement in writing that the party seeking coverage be named as an additional insured on a “policy” of insurance. Accordingly, Johnson & Bell’s client had no duty to defend or indemnify the general contractor in the underlying case.

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