General Liability Insurer Properly Denies Defense Under Non-Standard Additional Insured Endorsement

The California Court of Appeal has held that a general liability insurer had no duty to defend a corporation under the terms of a non-standard “additional insured” endorsement. ( Boeing Company v. Continental Casualty Company (2007) 157 Cal.App.4th 1258)

Facts

Continental Casualty Company (Continental) issued a liability policy to Christmas in April USA (CIA), a non-profit corporation that enlists volunteers to repair and rehabilitate homes of low-income elderly persons. The Boeing Company (Boeing) supervised and provided materials for one of the home repair projects. A volunteer worker on the project suffered an injury and filed suit against Boeing.

Boeing tendered defense of the lawsuit to CIA’s insurer, Continental, pursuant to a “special endorsement” in the Continental policy that afforded “additional insured” status to “any person or organization while acting as any agent for, or on behalf of, the named insured [CIA]…. [H]owever, such coverage will be granted only on written request of the insured .” Continental denied Boeing’s tender on the ground that the named insured, CIA, had never made a written request to have Boeing added as an additional insured on the Continental policy.

Boeing then filed suit against Continental for breach of contract, bad faith and declaratory relief based on Continental’s refusal to defend. However, the trial court dismissed Boeing’s complaint because the named insured, CIA, had never sent Continental a written request to add Boeing as an additional insured. Boeing appealed.

Holding

The Court of Appeal affirmed the ruling that Continental had no duty to defend Boeing. The appellate court held that the “special endorsement” was unambiguous and required “the insured”—CIA—to send a written request to add an additional insured. The court cited various portions of the Continental policy to support its ruling that the phrase “the insured” referred to CIA. While Boeing alleged that Boeing had sent a written request to Continental for additional insured coverage, Boeing could not amend its complaint to state that “the insured”—CIA—had—done so. Thus, Boeing could not possibly qualify as an additional insured and Continental properly denied a defense.

Comment

Courts determine whether language in an insurance policy is ambiguous by looking at that language in the context of the policy as a whole. In this case, the court found that the policy language was clear and thus enforced it as written.