The Roof Fire: Your Work, Additional Insured Status, and the Injured Roofer
Ridgeline Roofing, a subcontractor, replaced the roof on a 20,000-square-foot warehouse owned by Beacon Realty and leased to Northline Distributors. Ridgeline's commercial general liability policy is occurrence-based with a $1,000,000 each-occurrence limit and includes a blanket additional insured endorsement naming Beacon as an additional insured. Eight months after completion, Ridgeline's crew used a tar kettle that ignited the roof deck; the fire destroyed $400,000 of Northline's inventory and required $90,000 of roof replacement. In a separate incident the same month, a Ridgeline employee fell through a skylight and was seriously injured. Northline is suing both Beacon and Ridgeline; the injured employee is suing Beacon, alleging a dangerous skylight.
1. How much of the fire loss will Ridgeline's CGL policy pay, and why?
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Split the loss by what was damaged, not by who was negligent.
- The $90,000 roof replacement - not covered. The "damage to your work" exclusion bars property damage to the insured's own work arising out of it, and the cost of repairing or replacing the defective work itself is the classic application. The CGL is a third-party liability policy, not a performance bond or a warranty on workmanship.
- The $400,000 of Northline's inventory - covered in principle. This is damage to other property caused by the work. The exclusion contains a significant exception: it does not apply to damage to property other than the work itself. Faulty workmanship that damages something else is an occurrence under standard CGL analysis, and that "resulting damage" is the core of the insured's exposure.
But the outcome depends on the additional insured endorsement's wording. If Beacon's AI endorsement limits coverage to liability "caused in whole or in part by" Ridgeline's acts, Beacon is covered only for vicarious liability, not for its own independent negligence. Also confirm the endorsement extends to completed operations - many forms (the narrower additional insured forms) stop at the completion of the subcontractor's work, which would leave Beacon bare on this fire.
Practical step: tender the defense to Ridgeline's carrier, but advise Beacon to assume the loss may fall outside the AI grant and to involve its own liability carrier.
2. Beacon's adjuster asks whether the AI endorsement leaves Beacon fully protected. What is your answer?
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No - additional insured status is not the same as being the named insured, and the gaps are systematic.
- Scope of the grant. Blanket AI endorsements vary enormously. Broad forms cover liability arising out of the named insured's operations; narrow forms cover only vicarious liability for the named insured's acts. Under a narrow form Beacon's own failure to maintain the skylight guards is uninsured.
- Completed operations. The loss occurred eight months after the roof was finished. If the endorsement does not include completed operations, there is no coverage at all for Beacon on this fire.
- Limits are shared, not added. Beacon shares Ridgeline's $1,000,000 limit; if the inventory and injury claims together exhaust it, nothing is left for Beacon.
- Claims-made vs occurrence, and the tail. Ridgeline's occurrence form responds as long as the injury or damage occurred during the policy period, but Beacon may be sued years later after Ridgeline has dissolved - the additional insured has no control over the sub's renewal or cancellation.
Recommendation: verify the certificate attaches the actual endorsement form, require broad AI status with completed operations and primary/non-contributory wording in the subcontract, confirm Ridgeline's limit supports the project, and place Beacon's own liability coverage so the risk is not wholly dependent on a subcontractor.
3. The injured Ridgeline employee sues Beacon. Which policies respond, and what is the gap?
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Map each claim to a policy.
- Against Ridgeline (employer): barred by the exclusivity of the workers' compensation remedy. Ridgeline's workers' comp policy responds to the injury; its employer's liability part responds only to suits outside the exclusivity bar.
- Against Beacon (third party): the employee may sue Beacon, and the question is who defends and indemnifies Beacon.
The gap: Ridgeline's CGL carries an employer's liability exclusion barring coverage for bodily injury to an employee arising out of and in the course of employment - and the additional insured endorsement typically carries down that same exclusion, so Beacon gets no coverage from Ridgeline's CGL for this claim. Beacon faces the suit on its own general liability policy, subject to its own limits and deductibles.
Why this matters contractually: Beacon's protection against exactly this scenario is the indemnity and insurance clause in the subcontract plus its own umbrella. Confirm whether the subcontract requires Ridgeline to indemnify Beacon for third-party injury claims (to the extent permitted by law) and whether the indemnity is backed by Ridgeline's employer's liability limits, which are usually much smaller than the CGL limit.
Action items: notify Beacon's carrier immediately (the tender to Ridgeline's CGL will be denied), preserve the skylight maintenance records, and revisit the subcontract language at the next renewal.