USX Corp. v. Liberty Mutual Insurance
645 N.E.2d 396 | Appellate Court of Illinois | 1994
What This Case Means for Subcontractors
USX, a steel subcontractor, promised to self-insure instead of buying traditional insurance and naming the general contractor as an additional insured. The Illinois court ruled that self-insurance is just a private promise to pay for losses, not actual insurance. This means a subcontractor's self-insurance promise cannot replace the insurance requirements in a contract—the general contractor loses the protection of being named on a real insurance policy.
Key Takeaways
- •Never offer self-insurance as a substitute for traditional insurance policies. Courts will not enforce it as a valid insurance arrangement.
- •If you want to self-insure, get it approved in writing before signing the contract and understand you're making a personal indemnity promise, not providing insurance coverage.
- •General contractors will not accept self-insurance in place of named additional insured status on real policies. Expect to buy actual insurance or lose the job.
Self-insurance is in fact a mere private promise to indemnify.
Frequently Asked Question
Can I promise to self-insure instead of buying insurance for my subcontract?
No. Illinois courts treat self-insurance as a personal promise to pay losses, not actual insurance. Your general contractor won't be protected as an additional insured, and the contract requirement for insurance won't be satisfied. You must purchase a real insurance policy or renegotiate the contract terms before signing.
Related Cases
Fitzgerald v. Advanced Spine Fixation Systems, Inc.
A manufacturer must indemnify an innocent seller for products liability litigation costs under Texas Civil Practice & Remedies Code § 82.002(a), even if the seller did not sell the particular defective product that injured the plaintiff, provided the seller qualifies as a 'seller' under the statute.
Associated Indemnity Corp. v. CAT Contracting, Inc.
A surety does not owe a common law duty of good faith to its principal, but good faith is a contractual condition precedent to indemnification, requiring proof of improper motive or willful ignorance rather than mere negligence.
Entergy Gulf States, Inc. v. Summers
A premises owner that contracts for work performance and provides workers' compensation insurance to contractors' employees qualifies as a statutory employer entitled to the exclusive remedy defense under the Texas Workers' Compensation Act.
Lee Lewis Construction, Inc. v. Harrison
A general contractor owes a duty of care to a subcontractor's employee for fall protection when it retains actual control over safety measures, and the evidence sufficiently supported findings of negligence and gross negligence.
Rory v. Continental Insurance
Unambiguous contractual limitations periods in insurance policies must be enforced as written unless they violate law or public policy; judicial assessments of reasonableness cannot override clear contract terms.
American Trucking Associations, Inc. v. City of Los Angeles
The court reversed the district court's denial of preliminary injunction, finding ATA likely to succeed on FAAA preemption claims because many concession agreement provisions are not genuinely responsive to motor vehicle safety.