Duty to Defend and Exclusions
GGC is a real estate developer that hires subcontractors to perform its work. GGC was developing a single-family home and purchased an insurance policy from Nautilus Insurance Company to protect itself against any potential liability arising out of its operations at the home. The policy required that Nautilus pay for bodily injury; however, there was an exclusion clause which stated that any employees, contractors, volunteers, and workers would not be covered. An employee was defined as someone who provides services to the insured.
Arnulfo Valdovinos was invited onto the work site by a subcontractor and fell into a hole in the property’s floor and sustained injuries. He claimed he was an invitee of the subcontractor and that GGC was negligent in its ability to keep the premises safe for workers and other persons and subsequently filed suit. Nautilus claims that they do not need to defend or indemnify GGC because Valdovino’s injuries were not within the policy’s coverage. Nautilus moved for summary judgment.
To determine whether an insurer has a duty to defend its insured, the Court must “compare the factual allegations of the underlying complaint…to the language of the policy.” The facts of the complaint must fall within the policy’s coverage in order for the duty to defend to arise. The issue is whether Valdovinos is covered under the policy, or if he falls under the exclusion. However, since this is a federal case based on diversity of citizenship, Nautilus wants the Court to stay the case pending resolution of the State Court case. The Court concluded that the proper course of action was to stay the present case pending the resolution of Valdovino’s State Court lawsuit.
Nautilus Insurance Company v. Glenn Gutnayer Construction, Inc., 2011 WL 1326225 (N.D.Ill.)
