Carefully Consider That Additional Insured Endorsement- It May Still Protect You!

Article by Melissa Wright

The Ontario Superior Court of Justice recently held that an additional insured was covered by a policy, where there was no direct claim against the named insured, even though the coverage was limited to claims arising from the negligence of the named insured.1 The most common additional insured endorsements are generally speaking very restrictive in their application. As this case demonstrates, such an endorsement may still provide protection to an additional insured even where the plaintiff has no direct claim against the named insured.

The plaintiff hired Davis Systems of North Bay Nipissing (“Davis Systems”) to repair damage to a hotel that was caused by a fire. Davis Systems in turn subcontracted that work to Crystal Clean Carpet & Upholstery Specialist (“Crystal Clean”). Crystal Clean allegedly left a window open in the middle of winter, causing the pipes to freeze and burst.

The plaintiff sued both Davis Systems and Crystal Clean for damages resulting from Crystal Clean’s alleged negligence. Davis Systems cross claimed against Crystal Clean and brought a third party action against Crystal Clean’s insurer, Economical Insurance Group (“Economical”). Under the policy of insurance Davis Systems was listed as an additional insured.

While the plaintiff eventually consented to a dismissal of the action against Crystal Clean, the cross claim and third party claim continued. Economical and Crystal Clean together brought a Rule 21.01(1)(b) motion seeking a dismissal of the third party claim on the basis it disclosed no reasonable cause of action.

In order for Economical to have a duty to defend the action against Davis Systems, there must be the possibility of a duty to indemnify.

Economical and Crystal Clean argued that since the action against Crystal Clean had been discontinued, the true nature and substance of the claim was with respect to Davis Systems’ negligent acts and not with respect to liability arising out of the operations of Crystal Clean. It argued that the discontinuance was an acknowledgement by the plaintiff that the factual allegations could not support its claim; accordingly coverage for Davis Systems’ omissions relating to Crystal Clean’s operation could not be triggered.

The court did not accept Economical and Crystal Clean’s argument for the following reasons. First, the court did not know the reasons why the plaintiff discontinued its claim against Crystal Clean. Second, even if the discontinuance could be said to be an admission, it was not binding on Davis Systems. Third, the discontinuance could only be said to be an acknowledgment that the plaintiff’s claim against Crystal Clean could not succeed. It was not an acknowledgment in respect of the plaintiff’s claim against Davis Systems.

The pleadings alleged that Davis Systems was liable to the plaintiff for breach of contract as a result of Crystal Clean’s negligence. This allegation was, in the court’s view, within the coverage provided by the policy. Notably, the exclusion in the additional insured clause was restricted solely to Davis Systems’ own negligent acts. The clause read as follows:

[..] Davis Systems are hereby added to the policy as additional Insureds but only with respect to liability arising out of the operations performed by or for the named insured but excluding any negligent acts committed by such additional Insured. (Emphasis in original)

As there was no other factual basis for Davis System to be liable other than Crystal Clean’s negligence, the discontinuance against Crystal Clean did not change the factual basis upon which the plaintiff was seeking to find Davis Systems liable. The policy covered damages for Crystal Clean’s negligence when those damages were sought from Davis Systems. Accordingly, the motion was dismissed.

In this case, there was real value added by the additional insured endorsement even though the language of the clause itself was restrictive. Additional insured endorsements should be carefully reviewed by your counsel to ensure that your interests are being protected.

Footnote

1. Innvest Real Estate Trust (o/a Travelodge Airport North Bay) v. 1328151 Ontario Inc. (o/a Paul Davis Systems of North Bay Nipissing) et al., 2014 ONSC 5891

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Sign up at ILSTV.com for our weekly Canadian insurance newsletter 

Seattle Seahawks quarterback Russell Wilson has taken out an insurance policy

TSN.ca Staff

Seattle Seahawks quarterback Russell Wilson has taken out an insurance policy to protect the Super Bowl winner against injury in his contract year.

According to ESPN’s Adam Schefter the insurance policy would pay Wilson millions should he sustain a career-ending injury in 2015.

Wilson and the Seahawks have been in the process of negotiating a new deal, though Wilson’s latest step indicates the two side are not close.

The 26-year-old has led the Seahawks to consecutive Super Bowls and has made the playoffs in each of his first three seasons. In 2014, Wilson threw for 3,457 yards with 20 touchdowns and seven turnovers. He also rushed for a career-high 849 yards.

Should the Seahawks fail to secure Wilson with a long-term contract, the team is expected to place the franchise tag on the quarterback in 2016.

Tavaris Jackson and R.J. Archer are listed behind Wilson on the Seahawks roster.

Car Owner Reunited With Her “First Love” 43 Years After Corvette Stingray Was Stolen

By  | Consumerist

In a rare, heartwarming tale of the return of a valued possession once thought to be lost forever, the owner of a 1972 Corvette Stingray that was stolen 43 years ago was finally reunited with her “first love.” And she is not going to let it out of her sight ever again.

The Duluth, GA resident bought the car when she was 19 using money from her first job toward a down payment and owned it for just six months, according to a statement from Allstate, which had paid out a claim on the car decades ago after it was stolen while she was at work.

The insurer worked with the used-car dealer who realized there was something funny about the car’s title and government officials to reunite the owner with what she calls her “first love.”

“That car, I hope, will never leave my sight again,” she told Bloomberg. “It needs a lot of love and attention. I want to restore that car, I want to bring it back to life.”

The car dealer said he bought it from a widow in 2014 for $10,000, and noticed something was suspicious while going through the documents that came with the car.

“It wasn’t a convertible, but the title had ‘CN,’ like a convertible should have,” he told Bloomberg. “And then, I looked at the year model on the title, and it said 1969. Well, that body had not been modified at all, and that was a ’72 model car.”

He called the authorities, who traced the car’s ownership back to Allstate. Although in these cases the insurance company will often auction off recovered property, the original owner was able to buy it back for an undisclosed sum, an Allstate spokesman said.

“In the history of Allstate, at least, which goes back 80-some-odd years, we had never come across something like this,” he said. “Almost all stolen cars are either found within the first five or six weeks, or not at all.”

Obamacare, states and insurers make gender reassignment surgery more accessible

By Quentin Fottrell, Personal Finance Reporter | Market Watch

Caitlyn Jenner’s “Vanity Fair” cover has created a rare, possibly even enlightening moment in American culture. The cover image went viral in minutes, garnered Jenner more than 2 million Twitter followers in 24 hours and — along with transgender activists like actress Laverne Cox, who recently appeared on the cover of “Time” magazine, and writer Janet Mock — will help promote more understanding and, in an ideal world, less discrimination against the transgender community. On Monday, hours after Jenner’s cover photo appeared online, President Barack Obama tweeted: “It takes courage to share your story.”

The former Olympic champion known as Bruce Jenner, who appeared in the E! television series “Keeping Up With the Kardashians” and will chronicle her own journey on that channel, has had facial and breast surgery, although it’s not clear whether she has had or will have full gender reassignment surgery. The World Professional Association for Transgender Health, a professional association dedicated to promoting respect, research and advocacy for transgender health, advises people undergoing a gender transition to live for a year as their new gender before choosing full reassignment surgery.

The good news: It’s never been easier for transgender people to access gender reassignment surgery — if they have insurance and live in the right state. More than two dozen major insurance carriers provide plans without blanket exclusions for transgender-related health care, either through fully-insured plans or as a third party administrator of self-insured plans, according to the Human Rights Campaign, a nonprofit group that works for lesbian, gay, bisexual and transgender equal rights. They include Aetna AET, -0.32%  , at least eight Blue Cross state programs, Cigna CI, -0.96%  , UnitedHealth UNH, +0.51%   and Emblem Health.

Regulators in nine states and the District of Columbia have also introduced laws banning insurance discrimination against treatments for gender reassignment. The other eight are California, Colorado, Connecticut, Illinois, Massachusetts, Oregon, Vermont and Washington, according to the Transgender Legal Defense & Education Fund. “But some insurers still deny claims and flout the law until someone pushes back against them,” says Michael Silverman, executive director at Transgender Legal Defense and Education Fund. Last December, New York Governor Andrew Cuomo told insurers in a letter: “An issuer may not deny medically necessary treatment otherwise covered by a health insurance policy solely on the basis that the treatment is for gender dysphoria.”

It’s never been easier for transgender people to access gender reassignment surgery — if they have insurance and live in the right state. Quentin Fottrell reports.

New federal laws have also helped create a more inclusive environment. In May 2014, the Obama administration lifted a 33-year-old ban on Medicare coverage for gender reassignment surgery. The 2010 Affordable Care Act does not explicitly require insurers to cover gender reassignment surgery but, according to this White House letter, insurers “can no longer turn someone away just because he or she is lesbian, gay, bisexual, or transgender.” This has not yet been tested in court, says Josh Block, a senior staff attorney with the American Civil Liberties Union LGBT Project in New York.

Full gender reassignment surgery can cost from $10,000 to $100,000, but most people don’t spend more than $30,000 or $40,000, says Jamison Green, president of the World Professional Association for Transgender Health, an international nonprofit. While 61% of transgender Americans reported having medically transitioned with hormone therapy, for instance, only 33% said that they had surgically transitioned, according to a 2011 survey by the National Center for Transgender Equality and National Gay and Lesbian Taskforce. It may be because they chose not to have gender reassignment surgery or, the report found, because a sizable percent of those who have had hormone therapy are not yet living full-time in their new gender.

READ HERE FOR MORE: Why gender reassignment surgery is more accessible

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from ILSTV

You have Successfully Subscribed!

Pin It on Pinterest