FEDERAL INSURANCE COMPANY v. AMERICAN HARDWARE MUTUAL INSURANCE COMPANY, 124 Nev. Adv. Op. No. 31 (May 29, 2008)
In an opinion issued in May, the Nevada Supreme Court addressed the issue of whether, under Nevada law, an additional insured endorsement provides coverage for an injury caused by the sole independent negligence of the additional named insured.
Clark Lift West, Inc. was issued a liability insurance policy by American Hardware Mutual Insurance Company. Clark Lift provided maintenance and repair services at Southern Wine and Spirits of America, Inc., so Southern Wine was listed as an additional insured on Clark Lift's insurance policy with American Hardware. The policy covered Southern Wine, as an additional insured, for liability only arising out of Clark Lift's ongoing operations performed for Southern Wine.
Charles Pierce, a Clark Lift employee, was injured while working at Southern Wine's facility. Pierce initiated a personal injury claim against Southern Wine seeking damages for Southern Wine's negligence in causing his injuries. American Hardware refused to defend the lawsuit, asserting that its additional insured policy did not extend to Southern Wine's negligence.
Using traditional interpretation for ambiguous insurance contracts, in favor of the insured and favoring coverage, the Court held that "when the term "arising out of the operations" of a named insured is included in an additional insured provision, that term must be read to include coverage for acts arising from the additional insured's own negligence."
The Court concluded that "unless the contrary intent is demonstrated by specific language excluding or limiting coverage for injuries caused by the additional insured's independent negligent acts, there is coverage."
See the full opinion here.