Additional Insured, State Fund, and the Unguarded Opening
Northline Construction is the general contractor on a six-story mixed-use project in Everett. Its subcontract requires Cascade Framing to name Northline as an additional insured on a primary and non-contributory basis, to indemnify Northline, and to waive subrogation. Cascade's CGL is an unmodified ISO occurrence form with a $1 million limit. Two injuries occur: a Cascade carpenter falls through a floor opening that Northline's superintendent left unguarded, and Northline's own superintendent is struck by a bundle of lumber that Cascade's crew dropped. Washington's workers' compensation system is a state fund; both employers participate and neither is self-insured.
1. Northline tenders the carpenter's claim to Cascade's CGL as an additional insured. What happens, and why does the additional insured endorsement not solve Northline's problem?
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The tender is denied, and it is the right answer under the form.
The carpenter is Cascade's employee. The employer's liability exclusion in the CGL bars bodily injury to an employee of the insured arising out of and in the course of employment. Additional insured status does not override the policy's exclusions - the endorsement extends who is an insured, not what is covered. So the endorsement that the contract required is, for this claim, illusory value.
Why the risk exists at all: the carpenter's exclusive remedy against Cascade is the state fund, but Northline is a third party he can sue, and the unguarded opening is exactly the kind of negligence a plaintiff's lawyer will target.
What the contract should have bought instead:
- An employer's liability policy - difficult in Washington, where private workers' comp is not available and only self-insured employers can offer meaningful EL. Cascade is not self-insured.
- A robust indemnity with real financial backing, which is itself constrained (see below).
- A waiver of subrogation, which is worth having: it keeps the state fund from pursuing Northline after paying the carpenter.
Northline's broker should have priced the gap rather than assuming the certificate closed it.
2. Who pays for Northline's superintendent, and what does Northline's own CGL do?
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First layer: the state fund pays the superintendent's medical and time-loss benefits. That is his exclusive remedy against Northline.
Against Cascade: the superintendent is a third party to Cascade's workforce, so he can sue Cascade directly, and Cascade's CGL responds to that suit. He is not Cascade's employee, so the employer's liability exclusion does not apply. Northline's own CGL is not the respondent.
What Northline's CGL does not do: it excludes bodily injury to Northline's own employee arising out of employment. There is no coverage for the superintendent's injury under Northline's policy, and there is no defense obligation for a suit by him against Northline.
The practical split: Northline's workers' compensation cost goes up from the claim, the state fund may seek recovery from Cascade, and Cascade's CGL faces the superintendent's tort claim. Northline's contractual indemnity from Cascade is the only mechanism to shift dollars back - which leads directly to the next problem.
3. Is Cascade's promise to indemnify Northline enforceable for the opening Northline's own superintendent left unguarded?
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Largely not.
Washington's anti-indemnity statute for construction agreements voids a promise to indemnify the promisee for the promisee's own negligence, and where negligence is concurrent it enforces the clause only to the extent of the indemnitor's fault.
Apply it here:
- The opening was Northline's to guard. That negligence belongs to Northline and cannot be contracted away.
- If a jury assigns the carpenter's fall, say, 70% to Northline and 30% to Cascade for failing to report or barricade the hazard, Cascade indemnifies only for its 30%.
- The clause is not void; it is severed. Northline still gets a defense and indemnity for Cascade's share, and nothing more.
Consequences for the file: the risk transfer package Northline believed it bought is smaller than the certificate suggests. The insurance response is denial, the indemnity response is proportional, and the remaining exposure sits with Northline's own casualty program and its workers' compensation experience rating. The broker's renewal conversation should focus on whether the contract's risk allocation matches what insurance can actually deliver in a monopolistic workers' comp state.