72 N.E.3d 957
Ind. Ct. App.2017Background
- Walsh Construction hired Roadsafe as a subcontractor; Roadsafe agreed to indemnify Walsh and to name Walsh as an additional insured on a primary, noncontributory CGL policy.
- Roadsafe obtained a CGL policy from Zurich with a $500,000 per-occurrence self-insured retention (SIR) endorsement attached.
- The SIR endorsement required the named insured (Roadsafe) to pay damages and pro rata defense costs up to the SIR, made compliance a condition precedent to coverage, and stated Zurich is liable only for amounts in excess of the SIR.
- A motorist sued Walsh alleging negligence in the traffic pattern; Walsh tendered defense to Roadsafe, which did not defend or indemnify Walsh, so Walsh sought defense/indemnity from Zurich.
- Zurich denied coverage on the ground the $500,000 SIR had not been satisfied; Walsh sued for declaratory judgment. The trial court granted summary judgment for Zurich.
- On appeal, the court considered whether the SIR endorsement bars an additional insured (Walsh) from invoking Zurich’s duty to defend/indemnify until the SIR is satisfied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SIR applies to additional insureds so insurer’s duty to defend is triggered only after SIR exhausted | Walsh: SIR limits only relationship between insurer and named insured; does not eliminate Zurich’s duty to defend additional insureds | Zurich: SIR requires named insured (or any insured) to satisfy retention before insurer owes defense/indemnity to any insured, including additional insureds | Held: SIR applies to both named and additional insureds; Zurich has no duty to defend/indemnify Walsh until SIR satisfied |
| Whether SIR endorsement conflicts with CGL duty-to-defend language creating ambiguity | Walsh: Settlement/settlement-obligation language shows insurer may pay within SIR and thus SIR does not bar duty to defend | Zurich: Endorsement’s integrated language and definitions unambiguously place initial cost burden on named insured | Held: No ambiguity; endorsement is plain and controls inconsistent policy provisions |
| Whether SIR endorsement can be treated as condition precedent to coverage for additional insureds | Walsh: Conditioning Zurich’s duty on Roadsafe’s payment undermines primary status for Walsh | Zurich: Endorsement explicitly makes compliance a condition precedent and applies to “you or any insured” | Held: Compliance is a condition precedent and applies to additional insureds; Walsh remains an additional insured but cannot force Zurich to perform until SIR met |
| Whether summary judgment improper because insurer failed to prove SIR not satisfied | Walsh: Zurich didn’t designate evidence that Roadsafe hadn’t satisfied SIR, creating a fact issue | Zurich: Record shows Roadsafe did not defend/indemnify Walsh and tendered pleadings support Zurich’s motion | Held: No genuine issue; undisputed facts show Roadsafe hasn’t satisfied SIR and summary judgment for Zurich affirmed |
Key Cases Cited
- Cinergy Corp. v. Associated Elec. & Gas Ins. Servs., Ltd., 865 N.E.2d 571 (Ind. 2007) (insurer’s responsibilities arise only after self-insured retention amounts are satisfied)
- Allianz Ins. Co. v. Guidant Corp., 884 N.E.2d 405 (Ind. Ct. App. 2008) (insured must satisfy SIR before duty to defend is triggered)
- Monroe Guar. Ins. Co. v. Langreck, 816 N.E.2d 485 (Ind. Ct. App. 2004) (distinguishing deductibles and retained amounts; retained amount requires policyholder to absorb initial expenses)
- Williams v. Tharp, 914 N.E.2d 756 (Ind. 2009) (summary judgment standard reviewed de novo)