Getty Oil Co. v. Insurance Co. of North America
845 S.W.2d 794 | Texas Supreme Court | 1993
What This Case Means for Subcontractors
Getty Oil bought chemicals from NL Industries under a contract requiring NL to buy liability insurance naming Getty as an additional insured. When an explosion caused a wrongful death claim, Getty tried to collect under that insurance requirement. The Texas Supreme Court ruled that requiring a seller to add a buyer as an additional insured on the seller's insurance policy is legal and does not violate Texas's anti-indemnity statute, because it's a separate insurance obligation, not an indemnity agreement. This matters to subcontractors because it clarifies that additional insured requirements in contracts are enforceable and distinct from prohibited indemnity clauses.
Key Takeaways
- •Additional insured endorsements on your insurance are legally enforceable in Texas and do not violate anti-indemnity laws, even if your contract also contains indemnity provisions.
- •When a contract requires you to add someone as an additional insured on your policy, that's a separate obligation from indemnification and will be treated differently by courts.
- •Make sure your insurance policy actually allows you to add additional insureds before signing contracts that require it—verify coverage limits and endorsement availability with your insurer.
The additional insured provision does not support the indemnity agreement, but rather is a separate obligation.
Frequently Asked Question
Can my customer require me to add them as an additional insured on my liability insurance in Texas?
Yes. Texas courts have ruled that additional insured requirements are legal and enforceable, even in the oilfield and construction industries. This is treated as a separate insurance obligation, not as prohibited indemnification. However, you must confirm your insurance policy allows additional insured endorsements and that you have adequate coverage limits before agreeing to such requirements.
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