Additional Insured Tender After a Scaffold Fall
General contractor (GC) hires a framing subcontractor for a commercial project in Birmingham. The subcontract requires the sub to name the GC as an additional insured on its CGL policy on a primary and noncontributory basis. A sub employee falls from a scaffold. The scaffold was owned and assembled by the GC, and the GC’s superintendent directed the employee to use it despite a missing guardrail. The employee sues the GC for $2 million. The GC tenders the suit to the sub’s CGL carrier. The sub’s policy has a $1 million occurrence limit, an employer’s liability exclusion, and an additional insured endorsement covering the GC for liability “arising out of” the sub’s work, but excluding liability arising out of the GC’s sole negligence. The sub’s carrier denies, citing the sole negligence exclusion.
1. Does the sub’s carrier owe the GC a defense?
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The carrier probably owes a defense, at least under a reservation of rights. The duty to defend is broader than the duty to indemnify and is measured by the allegations, not the carrier's view of ultimate fault. The employee's suit arises from framing work at the GC's project; the GC is an additional insured for liability arising out of the sub's work. The sole-negligence exclusion may defeat indemnity if the GC is ultimately found solely at fault, but the complaint also involves the sub's employee using a scaffold to perform the sub's work. That creates at least a potential covered claim. The carrier should not deny on the exclusion before investigating the subcontract, the scaffold inspection records, and the superintendent's direction. It should accept the tender under a reservation of rights, protect the GC's defense, and pursue allocation or contribution later.
2. Is the carrier obligated to indemnify the GC now? Explain the fault and coverage issues.
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Indemnity is not yet determinable. If the trier of fact finds the GC solely negligent for the missing guardrail and the superintendent's direction, the sole-negligence exclusion may bar additional-insured coverage for the GC. If the sub's employee was negligent, the sub's supervisor failed to inspect, or the injury arose in part out of the sub's work, the endorsement may respond. Alabama's contributory-negligence rule can also affect the employee's recovery, but it does not by itself decide the AI coverage. The adjuster should obtain the subcontract, the AI endorsement form, the scaffold inspection logs, and witness statements; issue a reservation letter; and evaluate whether the GC has other insurance that is primary. Do not pay indemnity before the fault allocation is clear.
3. The GC’s own CGL carrier also tenders the defense. How should the adjuster handle the “other insurance” and “primary and noncontributory” issues?
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The adjuster should collect both policies, both tenders, and the subcontract, then compare the "other insurance" clauses and the AI endorsement. A valid primary-and-noncontributory endorsement generally makes the sub's policy primary for the GC's liability arising out of the sub's work, while the GC's own policy may be excess. But the sole-negligence exclusion and the scope of the sub's work can change that priority. The carrier should acknowledge the tender in writing, agree to defend under a reservation while priority is resolved, and avoid creating a coverage gap. If both carriers dispute priority, the adjuster should document each carrier's position, consider a defense-cost allocation, and escalate to coverage counsel before withdrawing from the defense.