Additional Insured
Exclusions-Business Liability

Premises owner is entitled to coverage in negligence suit as additional insured.
ATOFINA Petrochemicals Inc. v. Continental Cas. Co.
No. 04-0170 (Tex. Dec. 16, 2005)

    The Texas Supreme Court ruled a premises owner is entitled to coverage and a defense in an employee's negligence suit. Moreover, coverage was not barred by an exclusion in the policy.

    A&B Builders Inc. was hired to erect steel for construction on premises owned by ATOFINA Petrochemicals Inc. (Fina). An A&B employee, Larry Wisdom, was injured unloading steel for A&B on Fina's property. When Wisdom sued Fina and others for negligence, Fina requested coverage and a defense as an additional insured under A&B's general policy with Continental Casualty Co.

    The trial court granted summary judgment in Fina's favor. The appeals court reversed, finding Fina was not an additional insured at the time of the accident and, further, that coverage for Wisdom's claims against Fina was barred by a policy exclusion. Fina appealed.

    The supreme court reversed the appeals court's judgment and reinstated the trial court's judgment. Fina was an additional insured under the additional insured endorsement at the time of the accident. Fina orally accepted A&B's written construction proposal, which included a commitment to provide insurance to Fina as the premises owner.

    At that time, the supreme court found, A&B had a written contract that required it to provide insurance covering the Fina property. In addition, Fina executed a written agreement when its project manager signed the purchase order requisitions.

    The supreme court also found coverage for Wisdom's claims were not barred by the policy exclusion. The policy limited the insurance for an additional insured. As Continental argued, the endorsement extended broad coverage to Fina on all matters arising out of A&B's work.

Strafford Texas Insurance Law & Litigation Alert
January 31, 2006