Existence of Contract Alone Insufficient to Trigger Blanket Additional Insured Coverage.

In Eliou & Scopelitis Steel Fabrication, Inc. v. Scottsdale Insurance Company, Scottsdale moved for summary judgment seeking a declaration that it did not owe defense or indemnification to a purported additional insured.

The general contractor hired Ebenezer to install fabricated steel beams at a construction project. Ebenezer ordered the beams from E&S, and plaintiff, an Ebenezer employee, was injured while unloading the beams from E&S’s truck. The only documents between Ebenezer and E&S with respect to this project were two purchase orders that did not contain additional insured language. Nonetheless, E&S sought additional insured coverage from Ebenezer’s carrier, Scottsdale, on the basis of a general indemnification agreement that was labeled “General Indemnification of Eliou & Scopelitis Steel Fabrication on All Jobs & At All Locations.” The agreement required Ebenezer to carry general liability insurance “whenever working on an Eliou & Scopelitis Steels (sic) Fabrication job site … [and] name Eliou & Scopelitis Steel Fabrication and the developer and/or owner of the subject job site as additional insured for the duration of the job.”

E&S sought additional insured coverage from Scottsdale based on the general agreement, and a blanket endorsement that named as an additional insured, any organization “whom you are required to add as an additional insured on this policy under a written contract, agreement or permit … That person or organization is an additional insured only with respect to liability arising out of … your ongoing operations performed for that additional insured as specified in the written contract, agreement or permit.”

The parties testified that typically, E&S was hired by a developer/owner for steel fabrication, and then E&S hired Ebenezer to install the steel it fabricated. In those situations, Ebenezer was E&S’s subcontractor. However, in this case, the roles were reversed. Ebenezer was hired by the general contractor to install steel beams, and Ebenezer ordered the materials from E&S. As such, the court found that in this case the liability did not arise out of Ebenezer’s “ongoing operations performed for [E&S],” but rather it was E&S who performed ongoing operations (i.e. steel fabrication) for Ebenezer. Accordingly, the court granted Scottsdale’s motion and held that it did not owe defense or indemnification to E&S.

Oftentimes blanket additional insured endorsements provide coverage “as per contract.” However, the specific language of the contract and endorsement must be read together to ascertain whether coverage will be available to the purported additional insured.

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