I often discuss the role of the courts in broadening coverage for additional insureds in a Commercial General Insurance (CGL) policy. Here is another case where a court has extending coverage – probably well beyond what the underwriter intended at the time the policy was issued.
In the case of Evanston Ins. Co. v. ATOFINA Petrochemicals, Inc., 256 S.W.3d 660, 666 (Tex. 2008), ATOFINA contracted with Triple S Industrial Corporation for Triple S to perform maintenance and construction work at ATOFINA’s Port Arthur, Texas oil refinery. The service contract contained an indemnity provision and it required Triple S to carry certain minimum levels of liability insurance coverage. It also required Triple S to add ATOFINA as an additional insured on Triple S insurance policies. During the course of the work, a Triple S employee drowned after he fell through a corroded storage tank roof owned by ATOFINA.
ATOFINA demanded coverage as an additional insured from Evanston Insurance Company. Evanston denied the claim, arguing that the loss occurred as a sole result of ATOFINA’s negligence.
The trial court found that the policy did not exclude coverage. It agreed with ATOFINA. The appellate court affirmed. It found that the language of the policy which covered ATOFINA’s losses “with respect to operations” was broad.
“Generally, an event “respects” operations if there exists “a causal connection or relation” between the event and the operations; we do not require proximate cause or legal causation. In cases in which the premises condition caused a personal injury, the injury respects an operation if the operation brings the person to the premises for purposes of that operation. The particular attribution of fault between insured and additional insured does not change the outcome. Our interpretation results, in part, from the ordinary and natural meaning of the phrase “with respect to.” It also results from our recognition that, had the parties intended to insure ATOFINA for vicarious liability only, “language clearly embodying that intention was available.” The majority of other courts facing the issue have reached a similar result.”
Id. at 675 (emphasis added)
WHAT IS THE TAKEAWAY HERE?
For Insurance Companies: If the desire is to limit coverage to an additional insured, use specific language to clearly state your limitations in the policy or use express manuscript language in an endorsement that amends the “Who Is An Insured” provision.
For Policyholders: You should make a claim for coverage if (1) you have a contractual agreement for indemnity and defense with a subcontractor; and (2) the loss can be tied in any way, even the most casual connection, to the presence of the sub on the work site or the sub’s work for you.