Duty to defend an additional insured where there is a possibility it will qualify as an additional insured
An insurer has a duty to defend an additional insured in an underlying action when there is a possibility that the additional insured will qualify as an additional insured under the terms of the policy.
A third party sued a contractor, Pulte Home Corp., and a subcontractor, Kunde Construction, alleging that he suffered injuries when he fell into an unguarded sewer manhole due to the contractor’s and the subcontractor’s negligent acts and/or omissions. Insurer, Pekin Ins., issued an insurance policy to the subcontractor, Kunde Construction, naming Kunde Construction as the insured and naming the contractor, Pulte Home Corp., as an additional insured. The additional insured, Pulte Home Corp., tendered its defense to the insurer who denied the tender.
The applicable provision stated that a person or organization is an additional insured only with respect to liability incurred solely as a result of some act or omission of the named insured and not for its own independent negligence or statutory violation.
The insurer asserted that it had no duty to defend the additional insured, Pulte Home Corp., because the additional insured endorsement provided no coverage for the additional insured’s own negligence. The additional insured, Pulte Home Corp., argued that the third party’s injuries arose out of the subcontractor, Kunde Construction’s, failure to cover the sewer opening. The additional insured, Pulte Home Corp., argued that it was thus possible that it might be found to be vicariously liable for the subcontractor, Kunde Construction’s, acts or omissions and therefore the insurer had a duty to defend.
The court held that the insurer, Pekin Ins., had a duty to defend the additional insured, Pulte Home Corp., because it was possible that the subcontractor, Kunde Construction, would be found solely liable to the third party and that the additional insured, Pulte Home Corp., would qualify as an additional insured under those circumstances.
Pekin Ins. Co. v. Pulte Home Corp., 404 Ill.App.3d 336, 935 N.E.2d 1058, 343 Ill.Dec. 830 (2010).
