Endorsement Wording Should be Read in Order to Understand Coverage
July 9, 2012
The general liability insurer brought an action seeking a declaratory judgment that it owed no duty to defend the insured's subcontractor in a slip-and-fall lawsuit. This case is Pekin Insurance Company v. Tovar Snow Professionals, Inc., 2012 IL App (1st) 111136. Note that this opinion has not been released for publication at this time.
Holland filed a lawsuit against Tovar arising out of snow and ice removal activities where Holland fell. Tovar tendered the defense to Pekin Insurance pursuant to the terms of Tovar's subcontract with Dunleavy. Tovar was covered via a blanket automatic additional insured endorsement applicable to any written contract Dunleavy entered into requiring such coverage. Pekin denied coverage for Tovar and filed this declaratory judgment action.
The trial court ruled in favor of Tovar and this appeal followed.
The appeals court noted that the sole dispute concerns whether or not the construction of the insurance policy affords Tovar the ability to tender its defense of the underlying Holland negligence lawsuit to Pekin. Pekin argued that the insurance policy issued to Dunleavy restricted additional coverage endorsements only to construction contracts and did not include activities related to snow and ice removal because the word “construction” appeared as a limiting adjective in the endorsement heading in the insurance contract. Tovar disagreed and said it was an additional insured and, as such, was entitled to a defense.
The title of the additional insured endorsement was “Additional insured—when required by written construction contract for ongoing operations performed by you for an additional insured and/or your completed operations”. So, Pekin said that the insurance policy covered only construction activities as noted in the title of the endorsement, and snow and ice removal are not construction activities. The appeals court said, however, that that term “construction” appears only in the title or caption of the endorsement and the specific wording in the text of the endorsement contains no such limitation on the type of contract covered other than that they be written contracts. The court said that headings cannot limit the plain meaning of the text, and the law in Illinois clearly held that a heading or caption or title to a section of an insurance policy does not modify the coverage provided by the actual textual language appearing in the policy.
The court ruled that it was clear from the underlying complaint, the actual text of the insurance policy language, and the purpose for which the policy was written for Dunleavy that the facts of the accident brought the Holland lawsuit within the insurance policy coverage. This was so despite the language in the heading of the endorsement section that Pekin argues limited the text to construction contracts only. The ruling of the trial court was affirmed.
Editor's Note: The opinion of the appeals court states that headings cannot limit the plain meaning of the text when it comes to policy endorsements. Regardless of what the title of an endorsement states, the actual language in the body of the endorsement is what counts when an interpretation of coverage is made.