From the desk of Kyle Riley: Recently, the Washington Court of Appeals addressed the issue of whether contract language requiring insurance for the “entire progress of work” included a requirement for insurance covering “completed operations.”
Claims Pointer: When a contract requires acquisition of insurance and indemnification as an additional insured, coverage under an umbrella policy depends upon the language of the policy and the initial contract. Contractual language requiring insurance for the “entire progress of work” does not include “completed operations.” Although an umbrella policy may theoretically provide excess coverage above and beyond other insurance policies, its application will not extend beyond contract requirements.
Lewark v. Davis Door Services, Inc. and American States Insurance Co. 68634-8-1, 2014 WL 1316314 (Wash. Ct. App. Feb. 10, 2014)
Terrie Lewark was injured after attempting to open a door at Public Storage in Renton, Washington. The door had been repaired two months prior by Davis Door Services, Inc. In the master agreement between Public Storage and Davis Door, Public Storage required Davis Door to “procure and maintain at its own expense during the entire progress of the work” employer’s liability insurance and commercial general liability insurance naming Public Storage an additional insured. In addition to acquiring the employer’s liability insurance and commercial general liability insurance, Davis Door also took out an umbrella liability policy with American States Insurance Co. Lewark sued Public Storage and Davis Door. Public Storage assigned to Lewark its rights under the master agreement and settled with Lewark for $299,000. Davis Door settled with Lewark for $225,000. Under Public Storage’s assignment of rights, Lewark then sued American States for failing to defend and indemnify, alleging that Public Storage was an additional insured under Davis Door’s American States umbrella policy.
Division One of the Washington Court of Appeals reviewed the case following dismissal by the trial court. Whether Public Storage was an additional insured under the umbrella policy would turn on the language of the policy and the master agreement’s insurance requirement. The court noted that the master agreement only required employer’s liability insurance and commercial general liability insurance with limits of no less than $1,000,000. Davis Door had acquired both and named Public Storage as an additional insured. The court then examined the language of the umbrella policy. The umbrella policy stated that insured entities included those for which an insured is required by virtue of written contract to provide the kind of insurance afforded by the umbrella policy, but that the insurance provided would be limited by “the limits of insurance required by such contract.” Furthermore, the umbrella policy outlined that it provided excess coverage over other coverage and would not contribute with any other insurance.
While Lewark argued that the terms of the umbrella policy were ambiguous, the court found her argument unpersuasive. What was clear to the court was that Davis Door, after purchasing the insurance requirements with appropriate policy limits, was not required by the master agreement to do more. The umbrella policy was not required and, by its terms, only provided coverage in excess of the commercial general liability policy limits.
Reiterating the language of the master agreement, the court noted that insurance was required “during the entire progress of the work.” In Hartford Insurance Co. v. Ohio Casualty Insurance Co., the court had previously determined that coverage for “ongoing operations” did not include coverage for “completed operations.” Applying Hartford, the court concluded that the language of the master agreement between Public Storage and Davis Door did not require “completed operations” coverage.
With no requirement for excess coverage and no requirement for “completed operations” coverage, Lewark, whose accident occurred two months after repairs on the injurious door were completed, had no cause of action against American States under Public Storage’s assignment of rights. The court affirmed the trial court’s dismissal of her claims and later published its opinion for its precedential value.
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