Evanston Insurance Co. v. ATOFINA Petrochemicals, Inc.
256 S.W.3d 660 | Texas Supreme Court | 2008
What This Case Means for Subcontractors
ATOFINA hired Triple S for maintenance work and required Triple S to carry umbrella insurance naming ATOFINA as an additional insured. When ATOFINA got sued, it tried to claim coverage under the umbrella policy for its own negligence. The Texas Supreme Court ruled that umbrella policies can cover additional insureds even for their own negligence if the policy language allows it, and that insurers must honor settlement amounts they wrongfully denied. This matters to subcontractors because it clarifies your rights when you're named as an additional insured on a contractor's insurance policy.
Key Takeaways
- •If you're named as an additional insured on a contractor's umbrella policy, you may have direct coverage for your own negligence—check the policy language carefully
- •Once you settle a claim, the insurance company cannot later deny coverage and refuse to pay the settlement amount they wrongfully rejected
- •Broad indemnification clauses in service contracts can trigger umbrella insurance coverage obligations, so understand what insurance requirements you're imposing on contractors
The umbrella policy provides coverage for liabilities arising from the additional insured's sole negligence.
Frequently Asked Question
If I'm named as an additional insured on a contractor's umbrella policy, am I covered for my own mistakes?
Yes, according to this Texas case, if the umbrella policy language independently grants coverage, you can claim it even for your own negligence. However, you must review the specific policy language—not all policies are written the same way. Once you settle a claim, the insurer cannot later deny coverage and refuse to pay.
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