Most states have adopted a broad interpretation of coverage for losses suffered by an Additional Insured.
Traditionally, Additional Insureds are added to policies by an agreement with the policyholder. Coverage for losses incurred by an Additional Insured is generally limited under a standard ISO endorsement. The endorsement amends the “Who Is An Insured” section of the policy. The endorsement adds those who “you” have agreed to indemnify by contract, but only for liability “arising out of your ongoing operations” or “your work” or “premises owned by or rented to you.” You and Your is defined as the named insured. Not the Additional Insured.
A. Section II – Who Is An Insured is amended to
include as an insured the person or organization
shown in the Schedule, but only with respect to liability
arising out of your ongoing operations performed
for that insured.
Coverage depends on how a court applies the phrase “arising out of” to the facts of the claim. Generally, as a rule, most all jurisdictions interpret the phrase “arising out of” very broadly. If any fact can tie the damages to the presence of the Named Insured, then there will be coverage for losses caused by the Additional Insured. See, Travelers Cas. & Sur. Co. v. Elkins Constructors, Inc., IP 97-1807-C-T/G, 2000 WL 724006 (S.D. Ind. May 18, 2000) (the majority of courts considering the issue broadly extend coverage to Additional Insureds for losses “beyond merely the Additional Insured‘s vicarious liability for the actions of the Named Insured.”).