Supreme Court of Minnesota Upholds Denial of Coverage to Additional Insured in the Absence of Vicarious Liability

Introduction -

Construction contractors and subcontractors, as well as commercial policyholders generally, will wish to take note of a recent Supreme Court of Minnesota decision that lends insight into the scope of coverage provided by additional insured endorsements in insurance policies, the scope of protection afforded by indemnity provisions in construction contracts, and the reach of anti-indemnity state statutes.

In Eng’g & Const. Innovations, Inc. v. L.H. Bolduc Co., Inc., 825 N.W.2d 695 (Minn. 2013), the Court held that an endorsement making a contractor an additional insured on its subcontractor’s general liability policy only to the extent that damage was caused by the subcontractor’s acts or omissions, and which further expressly stated that the contractor did not qualify as an additional insured with respect to its independent acts or omissions, provides additional insured coverage only for the contractor’s vicarious liability for the subcontractor’s negligence. Because a jury found that the subcontractor was not negligent, the Supreme Court held that no basis existed to hold the contractor vicariously liable and that the contractor did not qualify as an additional insured on the subcontractor’s policy.

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