“Additional Insured” Counseled to Read the Policy

Robert M. Frey | Butler Snow | January 30, 2018

An Illinois General Contractor learned a hard lesson the other day; the case is Vivify Constr., LLC v. Nautilus Ins. Co., 2017 IL App (1st) 170192.

The General Contractor, Vivify Construction, subcontracted part of the job to Victoria. Naturally wishing to protect itself from claims arising from Victoria’s work, Vivify required Victoria to maintain liability insurance, and to include Vivify “as an additional insured for claims caused in whole or in part by Victoria’s negligent acts or omissions. . . .” Id.  (brackets omitted).

Victoria did indeed include Vivify as an Additional Insured.  Unfortunately for Vivify, however, Victoria’s policy contained an exclusion for claims by employees of “any insured’s contractors, subcontractors, or independent contractors. . . .”  The trial court found, and the appellate court agreed, that this language unambiguously applied:  Vivify was an “insured”; Victoria was a Vivify “contractor”; and the injured worker was an “employee” of Victoria.  (The Court seemed to pass over the equally-fatal exclusion for claims by “employees . . . of any insured. . . .”).  The court distinguished cases reaching a different result based on the separation-of-insureds clause: “none of those cases involved policies containing the broad exclusionary language at issue here.”

As a parting shot to Vivify the Court closed with this observation (emphasis supplied):

We observe that while Vivify contends it is unlikely that Victoria will be able to pay Vivify’s legal expenses and any judgment against it, Vivify could have protected itself by reading the policy to ensure that it satisfied the subcontract. We cannot rewrite an insurance policy to suit Vivify’s needs.

Which leads us back to what we said some while ago:  “demand a copy of the Policy (not merely a COI); and read the Policy when you get it.”

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