Mid-Continent Casualty Co. v. Global Enercom Management, Inc.
323 S.W.3d 151 | Texas Supreme Court | 2010
What This Case Means for Subcontractors
A subcontractor's workers died after being hoisted by a pickup truck with a pulley system. The Texas Supreme Court ruled that the insurance company's auto-use exclusion blocked coverage for the accident. However, the court found that the subsequent-to-execution exclusion did not apply because the subcontract was effectively executed through performance and mutual agreement before the accident occurred. This case shows that how and when contracts are signed matters for insurance coverage.
Key Takeaways
- •Get your subcontracts signed BEFORE work begins. Starting work before signing can create disputes about when the contract was actually executed, affecting insurance coverage.
- •Understand what your insurance excludes. Auto-use exclusions may block coverage for accidents involving vehicles, even if used in unconventional ways like hoisting equipment.
- •Broad indemnification clauses in subcontracts can require you to cover the general contractor's liability. Review these carefully and ensure your insurance covers the indemnification obligations you're assuming.
The auto-use exclusion in All States's CGL policy precludes coverage for the accident.
Frequently Asked Question
If I start work before signing the subcontract, will my insurance still cover accidents?
Maybe, but it's risky. Courts may find the contract was executed through performance, which could help with coverage. However, specific exclusions like auto-use may still block claims. Always sign contracts before starting work to avoid disputes about coverage and when obligations began.
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