Contractor Entitled To Coverage As Additional Insured For Injury To Employee Of Subcontractor, But Insurer Still Not Obligated To Defend
In Clarendon Nat’l Ins. Co. v. American States Ins. Co., 2010 U.S. LEXIS 16091 (D. Or. Civil No. 09-548-JO, February 22, 2010), the court addressed whether a contractor qualifies as an additional insured under a policy issued to a subcontractor for injuries to the subcontractor’s employees, and if so is it entitled to defense and indemnity. Providence contracted to remodel a home and hired Woodmaster as a subcontractor. During the course of the work, one of Woodmaster’s employees, Michael Stambough, was injured. Woodmaster was the named insured under a policy issued by American States and Providence was the named insured on a policy issued by Clarendon.
American States first argued that it was protected from liability to Providence by Oregon’s workers compensation statute. The court rejected this argument because the statute does not bar additional insurance being procured that may protect a contractor based on the fault of the employer-subcontractor. The court also rejected an argument that the Oregon statute voiding construction contracts to the extent they purport to provide indemnity for another’s negligence applied. The court reasoned that in this case indemnity was allowed under the statute because American States had agreed to indemnify Providence against liability for Woodmaster’s own acts or omissions. The court used a similar rationale for rejecting an argument that coverage was excluded because no liability could be imposed on Woodmaster. The exclusion did not apply because Providence only sought to be indemnified to the extent of Woodmaster’s fault.
Even though the court found that Providence was covered under the policy, as applied to the facts of the underlying case, there was no duty to defend. The court found that because the complaint could not be read to create a possibility that Woodmaster was at fault, American States had no duty to defend Providence. The court deferred ruling on the duty to indemnify.
