Additional Insured Status and Umbrella Policy
November 24, 2014
The property owner's assignee brought an action against the contractor's liability insurer to recover for bad faith refusal to defend and indemnify the owner as an additional insured in connection with the assignee's bodily injury claim. This case is Lewark v. Davis Door Services, Inc., 321 P.3d 274 (Wash. App. 2014).
Public Storage contracted with Davis Door to perform work at its facilities. The contract required Davis Door to maintain a commercial general liability policy that insured Public Storage during the entire progress of the work. Davis Door took out a general liability policy and an umbrella policy with American States Insurance Company.
In October 2006, Davis Door performed repair work on a door at a Public Storage facility. In December 2006, Lewark attempted to open the door and injured her back. She sued Public Storage and Davis Door. Public Storage settled with Lewark and she then settled with Davis Door. However, Lewark then sued Davis Door and American States as assignee of Public Storage; Public Storage claimed it was an additional insured under the umbrella policy and American States breached the contract by failing to defend and indemnify Public Storage.
The trial court dismissed Lewark's lawsuit and found that Public Storage was not an additional insured under the umbrella policy. This appeal followed.
The Court of Appeals of Washington, Division 1, noted that the threshold issue in the case is whether Public Storage is an additional insured under the umbrella policy. The question turned on the additional insured language in the umbrella policy and the insurance requirement in the agreement between Public Storage and Davis Door. The agreement required the contractor to procure and maintain during the entire progress of the work a general liability policy and an umbrella policy. The umbrella policy stated that insured persons or entities included any person or organization for which an insured is required by virtue of a written contract to provide insurance, but this is only with respect to operations by or on behalf of the insured and only to the extent of the limits of insurance required by that contract.
Public Storage asserted that this language is ambiguous. The court disagreed. The court said that the umbrella insurance policy was by its terms excess coverage over the general liability policy and excess over the amounts of insurance required by the agreement. Moreover, coverage under the umbrella policy was not required by the agreement. The court pointed out that the contract between Public Storage and Davis Door required Davis Door to maintain insurance during the entire progress of the work and that Lewark's underlying claim is based on injury more than two months after the repairs to the door had been completed. American States had argued that the contract between Public Storage and Davis Door did not require coverage of completed operations, only coverage during ongoing operations, and by its statement, the appeals court agreed.
The court ruled that the agreement required insurance during the entire progress of the work and read in context, that language does not require completed operations coverage. The umbrella policy only insured what is required by virtue of a written contract and completed operations coverage was not required in the agreement. Public Storage was not covered under the umbrella policy as an additional insured. The ruling of the trial court was affirmed.
Editor's Note: The Court of Appeals of Washington used the plain language of the contract establishing additional insured status and the plain language of the additional insured language in the umbrella policy to find that Public Storage was not an additional insured under the umbrella policy. Additional insured coverage was established only for ongoing operations and since the claimant was injured after the work was completed, there was no additional insured coverage.