Clear and Unambiguous Insurance Policy Terms are Enforced as Written unless Doing So Violates Public Policy
FCL Builders, Inc. (“FCL”) is a general contractor and hired Suburban Irownworks, Inc. (“‘Suburban”) as a subcontractor on a construction job. Suburban, in turn, further subcontracted with JAK Iron Works, Inc. (“JAK”) to erect steel on the work site. FCL’s subcontract with Suburban required them to obtain a certain amount of commercial general liability (“CGL”) insurance, which would cover Suburban and FCL. It also stated that any subcontractors that Suburban uses must also maintain the same level of CGL insurance, including having FCL as an insured.
About a month after JAK started the job, one of its employees was injured on the job and filed a negligence lawsuit against FCL and Suburban. FCL turned to plaintiff, Westfield Insurance Company (“Westfield”), for defense, but Westfield refused to either defend or indemnify FCL. They asserted that FCL did not qualify as an additional insured under its policy with JAK, even though JAK was contractually obligated to list FCL as one. The circuit court held that FCL was not an additional insured under the policy and granted summary judgment in favor of Westfield. FCL appealed.
FCL is not an additional insured under JAK’s policy. The policy stated that it requires a direct, written agreement in order to cover anyone other than JAK under the policy. There was never a written agreement between FCL and JAK, but the agreement was between FCL and Suburban. FCL and JAK only agreed in writing that FCL should be an insured under JAK’s policy, not that they actually were. Extrinsic evidence is not necessary here, because the contract is not ambiguous and it is the best way to know the intent of the parties.
Westfield Insurance Company v. FCL Builders, Inc., 948 N.E.2d 115 (Ill.App. 1Dist. 2011).
