Allegations of Complaint Comprising One Claim within Terms of Policy for Additional Insureds is Potential Liability for Insurer’s Duty to Defend
In Pekin Ins. v. Hallmark Homes, Hallmark Homes was involved in a construction project. Pekin issued an insurance policy to one of the other entities involved in the project, MC Builders, listing MC Builders as the policyholder and Hallmark Homes as an additional insured. The policy included an endorsement that stated that “Such person or organization is an additional insured only with respect to liability incurred solely as a result of some act or omission of the named insured and not for its own independent negligence.”
An employee of a subcontractor on the project was injured on the construction site and sued Hallmark Homes and MC Builders. Hallmark Homes tendered its defense to Pekin.
Pekin contended that because the complaint alleged that Hallmark Homes’ own negligence made it liable to the employee, any possible liability could not be based solely on the negligence of MC Builders, as required by the endorsement. Pekin contended that Hallmark Homes could not possibly fall within the terms of coverage and had no duty to defend.
The court held that Hallmark Homes was potentially vicariously liable solely on the basis of the acts or omissions of MC Builders. The court reasoned that insomuch as Hallmark Homes was the general contractor on the project, with overall supervision of the site, it was possible that Hallmark Homes could be vicariously liable for the negligence of MC Builders, for example if MC Builders caused or knew of the dangerous condition that caused the employee’s injury.
Pekin Ins. Co. v. Hallmark Homes, L.L.C., 392 Ill.App.3d 589, 913 N.E.2d 250 (Ill.App. 2 Dist., 2009).
