Connecticut Federal Court: No A.I. Coverage Simply Because Named Insured Employed Injured Plaintiffs

Northeast Utilities Serv. Co. v. St. Paul Fire & Marine Ins. Co.
(D. Conn. July 12, 2012)

A Connecticut federal judge recently ruled that a liability insurer was not obligated to provide additional insured coverage to a utility company absent allegations or evidence that the named insured subcontractor’s acts or omissions led to a fatal electrical explosion killing one of its employees.

Northeast Utilities (“NU”) entered into a Master Services Agreement with American Electrical Testing Co. (“AET”), under which AET agreed to furnish supervision, labor, material, and equipment to perform network protector maintenance in Waterbury, Connecticut. The contract required AET to obtain liability insurance naming NU as an additional insured. AET complied and procured liability coverage with an additional insured endorsement from Utica Mutual Insurance Company. It also procured excess insurance from St. Paul Fire and Marine Insurance Company.

In 2007, two of AET’s employees were providing maintenance at an electrical vault owned by NU. For reasons not explained in the parties’ motion papers, an explosion occurred that injured both employees and, ultimately, led to one’s death. The surviving employee and the deceased employee’s widow filed lawsuits against NU alleging that the injuries arose from NU’s acts or omissions. The complaint did not allege any negligence by AET. NU settled both actions for a total of $8.55 million.

NU tendered its defense and indemnity costs to Utica and St. Paul, which denied coverage on the ground that NU’s liability did not arise from AET’s acts or omissions, as required under the policy for additional insured coverage to apply. Ruling on the parties’ motions for summary judgment, the court upheld Utica’s and St. Paul’s denials, rejecting NU’s assertion that if it was held liable, its liability necessarily would arise from AET’s acts or omissions because the accident arose when AET workers were performing work in connection with the contract. In this regard, the court distinguished additional insured endorsements that provide coverage for injury arising from the named insured’s work and those that provide coverage for injury arising from the named insured’s acts or omissions, finding the second type of endorsement considerably narrower.

For a copy of the decision, click here.

Thomas F. Segalla and Carrie P. Appler

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