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When Insurer Let\'s Insured Unilaterally Choose Additional Insureds it  has no Standing to Complain  

An insurer, by drafting an open-ended additional insured endorsement  that allowed its insured, by entering into contracts under which the  insurer would be obligated to provide a defense to people unknown to the  insurer and which did not require that its insured to obtain the  insurer\'s approval of the contracts or require its insured to disclose  the identities of the third parties or require that named insured name  those parties as additional insureds. The insurer assumed the  responsibility of providing defenses for certain unknown and unnamed  third-party beneficiaries. 

In Westfield Insurance Company v. Walsh/K-Five Jv (I-14-4208);  Walsh/K-Five Jv (I-14-4209); Walsh Construction Company Ii, Llc/K-Five  Construction Company Jv, a Joint Venture; Walsh Construction Company Ii,  Llc; K-Five Construction Corporation; Arch Insurance Company; and Royce  Brown, Defendants, Walsh/K-Five JV (I-14-4208), Walsh/K-Five JV  (I-14-4209), Walsh Construction Company II, LLC/K-Five Construction  Company JV, a Joint Venture, Walsh Construction Company II, LLC, and  K-Five Construction Corporation, 2022 IL App (1st) 210802-U, No.  1-21-0802, Court of Appeals of Illinois, First District, Third Division  (August 17, 2022) compelled the insurer to live up to its agreements.

FACTS  Westfield Insurance Company (Westfield) filed a declaratory judgment  action seeking a determination that it owed no duty to defend or  indemnify defendants in an underlying personal injury lawsuit that  occurred at a construction site at which Walsh and K-Five were operating  a joint venture. In the underlying lawsuit, Royce Brown (Brown), an  employee of VMR Contractors, Inc. (VMR), a subcontractor at the  construction site, injured himself carrying rebar.  Coverage under the Policy  That\'s what occurred in this case. Because the plain language of the  Contractors Endorsement mandates that the endorsement does not apply to  "any person or organization covered as an additional insured on any  other endorsement now or hereafter attached," the joint venture  exclusion therein did not negate coverage for Walsh, K-Five or the Joint  Venture, as additional insureds under the Additional Insured  Endorsement.  The Court of Appeal affirmed the circuit court\'s rulings that granted  defendant Walsh Construction Company II, LLC\'s motion for a partial  judgment on the pleadings, granted defendants Walsh/K-Five JV  (I-14-4208), Walsh/K-Five JV (I-14-4209), Walsh Construction Company II,  LLC/K-Five Construction Company JV and K-Five Construction  Corporation\'s motions for partial summary judgment and denied plaintiff  Westfield Insurance Company\'s motions for summary judgment where  plaintiff had a duty to defend defendants.  ZALMA OPINION  Insurers who give away their underwriting pen to others have learned its  decision was expensive. In this case the insurer gave the insured the  right to make anyone with whom it contracted additional insureds. By so  doing Westfield gave away its right to underwrite its obligation to  insure and found it was insuring multiple people it had no idea, when it  issued the policy, it insured. Cases like this one should cause  insurers to reconsider whether it has sufficient premium to cover the  risk it is letting its named insured to impose on it by entering into a  contract with others.  (c) 2022 Barry Zalma & ClaimSchool, Inc.