Written Construction Contract Clarifies Competing Additional Insured Endorsements

The plaintiff, Lamp Incorporated (Lamp), brought a declaratory judgment action against Navigators Insurance Company (Navigators), seeking a declaration that Navigators breached its duty to defend Lamp in an underlying personal injury lawsuit stemming from a construction site accident (underlying lawsuit). Navigators filed a third-party complaint against West Bend Mutual Insurance Company (West Bend) seeking a declaration that West Bend, and not Navigators, provided primary, non-contributory coverage to Lamp and owed the duty to defend Lamp in the underlying lawsuit. Navigators also sought a declaration that its policy was excess above the West Bend policy and that Navigators owed no duty to defend Lamp in the underlying lawsuit until the primary limits of the West Bend policy were exhausted.

Lamp was an additional insured under the Navigators and West Bend policies.  However, an Additional Insured Endorsement to the Navigators policy stated that the insurance provided to Lamp was excess to other collectible insurance naming Lamp as an additional insured.  The West Bend policy also contained an Additional Insured Endorsement which provided that insurance to Lamp was excess, unless there was a written contract requiring that the insurance be primary or primary and non-contributing.

The Appellate Court found that the underlying construction contract entered into by West Bend’s insured, McKinney Steel & Sales, required McKinney to procure insurance naming Lamp, as an additional insured.  The contract further required that the insurance obtained to be primary insurance.

The Appellate court affirmed the circuit court’s finding of summary judgment in favor of Navigators, finding that the insurance policy issued by Navigators was excess to the primary policy issued by West Bend and that Navigators owed no defense or indemnity obligations to Lamp unless and until the West Bend policy was exhausted.

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