Mr. Randy Maniloff is the author of this article. Mr. Maniloff is Chair of the Insurance Coverage Group at Philadelphia-based Christie, Pabarue, Mortensen and Young, P.C., where he concentrates his practice in the representation of insurers in coverage disputes.  Maniloff handles a wide variety of insurance coverage matters in both the litigation and non-litigation arenas, including environmental property damage, toxic tort bodily injury/asbestos, construction defect, mold, general liability (products and premises), professional liability, director's & officer's liability, media liability, public official's liability, homeowners, first-party property, health care – including managed care and community associations.  The views expressed herein are solely those of the author and are not necessarily those of his firm or its clients.

Topics covered: Introduction

The additional insured problem: "arising out of"

ISO's solution: granting additional insured coverage based on fault

Will form CG 20 10 07 04 succeed in achieving ISO's objectives?

Conclusion

Introduction

There has been an increasingly popular insurance coverage debate—particularly in construction circles— over the extent of coverage afforded under an additional insured endorsement.  At issue is whether coverage for an additional insured is limited to its vicarious liability for the named insured's negligence or broader and extending to the additional insured for its own negligence—sole or otherwise.  The issue has produced a slew of reported decisions from courts around the country.  And like most coverage issues that have been the subject of extensive litigation, the results depend upon the facts, policy language and area code of the courthouse.

Not long ago, Insurance Services Office, Inc. announced that it had injected a shot of Botox into its additional insured endorsements in an effort to eliminate the lines that have been drawn over this issue.  Stating that it has seen enough of what it views as courts interpreting additional insured endorsements more broadly than their original intent, ISO introduced revisions to a number of its endorsements in this area.  Then, even more recently, ISO apparently concluded that an additional nip and tuck was necessary and withdrew its first set of additional insured endorsements and filed a new set.  ISO's effort at attempting to solve such a well-documented problem is a testament to the complexity of the issue.  In both filings, the revisions are intended to limit coverage to an additional insured for its vicarious or contributory negligence only.

Anytime ISO revises a policy form, the eyebrows of those insurance professionals affected by it go north.  Since additional insured endorsements are used frequently in a variety of risk scenarios, ISO's revisions in this area can be expected to cause a lot of forehead creasing. Moreover, one commentator predicts that ISO's new endorsements will hit the ground running:  "When ISO makes form changes, it often takes carriers months, if not years, to implement the changes.  Expect these [additional insured] changes to be introduced into the marketplace FAST". i