A split in authority exists as to whether additional insured coverage is limited to circumstances in which the additional insured is held vicariously liable for the named insured’s negligence, or whether it extends to acts of the additional insured’s own negligence, so long as the injury has some connection to the operations of the named insured. Decisions in this context are driven largely by applicable policy language.
In a recent decision, the Minnesota Supreme Court limited additional insured coverage to instances of vicarious liability and ruled that an insurer was not required to provide additional insured coverage to a contractor where the named insured sub-contractor had not committed negligence. Engineering & Construction Innovations, Inc. v. L.H. Bolduc Co., 825 N.W.2d 695 (Minn. 2013).
Engineering and Construction Innovations, Inc. (“ECI”) entered into a sub-contract with L.H. Bolduc Company for excavation and shoring services in connection with a pipeline project. During the project, Bolduc’s operations caused damage to the pipeline. However, a jury determined that Bolduc was not negligent. ECI repaired the damage and sought additional insured coverage from Travelers under a policy issued to Bolduc. The additional insured endorsement in the Travelers policy provided coverage to ECI for liability “caused by the acts or omissions” of Bolduc. Travelers denied coverage, arguing that without negligence on Bolduc’s part, there was no coverage under the endorsement. A Minnesota trial court agreed with Travelers, finding that the absence of negligence by Bolduc was fatal to ECI’s additional insured coverage claim. An appellate court reversed. The appellate court reasoned that the policy provided coverage to ECI for any “acts and omissions” of Bolduc, and was not limited to negligent acts.
The Minnesota Supreme Court reversed the appellate ruling. It ruled that the phrase “caused by the acts or omissions [of Bolduc]” in the additional insured endorsement was unambiguous and provided coverage to ECI “only in instances of ECI’s vicarious liability for Bolduc’s negligent acts or omissions.” The court reasoned that coverage under the additional insured provision “cannot be divorced from the concept of fault” and that without a finding of negligence on the part of Bolduc, there was no additional insured coverage. Interpreting similar policy language, other courts have likewise limited additional insured coverage to acts of vicarious liability. See Garcia v. Federal Ins. Co., 969 So. 2d 288 (Fla. 2007). Construing different additional insured provisions, some courts have deemed them ambiguous and ruled that coverage is not dependent upon the named insured’s negligence. See Evanston Ins. Co. v. Atofina Petrochemicals, Inc., 256 S.W.3d 660 (Tex. 2008); Mikula v. Miller Brewing Co., 281 Wis. 2d 712 (Wis. Ct. App. 2005).