DON’T GET TRAPPED IN THE COVERAGE GAP: ADDITIONAL INSUREDS UNDER COMMERCIAL GENERAL LIABILITY POLICIES – RECENT DEVELOPMENTS

nat rosasco • November 14, 2012

As the former owner of a contracting business I am all too familiar with the need to be named as an “additional insured” on a subcontractor’s certificate of insurance. Most business owners and risk managers though don’t fully understand the nuances of this often overlooked but vitally important part of their overall insurance coverage. For […] The post DON’T GET TRAPPED IN THE COVERAGE GAP: ADDITIONAL INSUREDS UNDER COMMERCIAL GENERAL LIABILITY POLICIES – RECENT DEVELOPMENTS appeared first on GGHH Law.



As the former owner of a contracting business I am all too familiar with the need to be named as an “additional insured” on a subcontractor’s certificate of insurance. Most business owners and risk managers though don’t fully understand the nuances of this often overlooked but vitally important part of their overall insurance coverage. For those that fail to read the fine print a trap may be looming and, as evidenced by a recent District Court case in the Northern District of Illinois, falling in could cost your company hundreds of thousands of dollars.


It is standard procedure in most service agreements that the service provider (the “Provider”) name the recipient of those services (the “Recipient”) as an “additional insured” on the Provider’s commercial general liability insurance (“CGL”) policy and evidence the same in a certificate of insurance issued by the Provider’s insurance carrier. The Recipient traditionally relies on this certificate as evidence of insurance in the event that damage to person or property is caused by the Provider, its employees or agents during the performance of the Provider’s duties under the agreement. The Recipient further expects that the Provider’s insurance will be primary in the event of an incident causing such damage. A recent case decided in the U.S. District Court for the Northern District of Illinois, however, exposed a coverage gap in which an additional insured might not be covered by the Provider’s CGL policy for damages incurred by the Provider’s employees.


The Provider in the case, Independent Building Maintenance Company (“IBM”), was engaged by Archer Daniels Midland Company (“ADM”) to perform window cleaning services. The service contract included a provision requiring IBM to obtain insurance and indemnify ADM for liability arising from the work IBM performed. A policy with The Burlington Insurance Company (the “Insurance Company”) was accordingly endorsed to name ADM as an additional insured. Subsequently, an IBM employee was cleaning windows when his ladder slipped causing him to injure his knee. The employee filed suit against ADM asserting negligence and premises liability. ADM tendered the defense of the suit to the Insurance Company, which ultimately disclaimed any duty to provide a defense. ADM settled the suit for $150,000 and alleged that it spent almost $200,000 in attorney’s fees over the course of the suit. The Insurance Company claimed it had no duty to defend ADM in the suit because (1) the policy’s cross liability exclusion barred coverage for bodily injury to an “employee of any insured” and (2) the employer’s liability exclusion barred coverage for bodily injury to an “employee of the insured”.


The court addressed the employer’s liability exclusion first, which is a typical provision in a CGL policy that bars coverage for personal injury claims by employees of the insured as such claims would normally be covered by an employer’s workers compensation insurance. The policy also included a severability clause that ADM relied on to argue that it was entitled to separate coverage under the policy so that a claim of injury by IBM’s employee against ADM would actually be covered. In general, severability clauses are intended to treat each entity covered under the policy as if each were insured separately. The court agreed with ADM, citing an Illinois Supreme Court case that considered the interplay of a severability clause and an employee exclusionary clause barring coverage for bodily injury to employees of “ the insured”. The court noted, however, that drafting a broader exclusion might be effective in barring coverage for employee’s suits against non-employer-insureds despite the existence of a severability clause.


Though the language of the employer’s liability exclusion was not sufficient for the Insurance Company to bar coverage to ADM, the court found the opposite with the cross liability exclusion which barred coverage for bodily injury to an “employee of any insured”. ADM attempted to rely on the same severability argument but the court disagreed, pointing in particular to the language “ any insured”. The court found that the distinction between the terms “ the insured” and “ any insured” in an exclusion is crucial in determining the significance of a severability clause, and even more so where the terms were used in different exclusion provisions of the same policy.


In summary, the court relied on the plain language to conclude that the employer’s liability exclusion did not bar coverage for ADM because the injured employee was not actually ADM’s employee (i.e., not an employee of “ the insured” under the plain language of the exclusion), but did bar coverage for ADM under the cross liability exclusion because, being named as an additional insured on the original endorsement, ADM became “ any insured” under the terms of the exclusion. In practice, business owners and risk managers should be wary to avoid the trap ADM fell into by doing some simple planning. First and foremost, realize that a certificate of insurance is merely evidence that coverage exists and is current but is subject to the exclusions in the original policy. Where possible obtain a waiver of the cross liability exclusion in the certificate of insurance, and be sure your counsel negotiates strong contractual indemnity provisions in the underlying agreement and that the Provider has the balance sheet strength to honor them.


For further information or a free consultation contact Jordan Uditsky at juditsky@gghhlaw.com.

The post DON’T GET TRAPPED IN THE COVERAGE GAP: ADDITIONAL INSUREDS UNDER COMMERCIAL GENERAL LIABILITY POLICIES – RECENT DEVELOPMENTS appeared first on GGHH Law.

Employers Can Require COVID-19 Vaccinations For Most Employees

By nat rosasco • February 25, 2021
As this relentlessly awful year mercifully draws to a close, a light at the end of our pandemic tunnel is rapidly approaching. COVID-19 vaccines are poised for approval, and it is expected that distribution will begin in earnest shortly. But no matter how much and how confidently the FDA and other health experts proclaim these vaccines to be safe and effective, there are large numbers of Americans who say they won’t get the shot when it becomes available. The most recent Gallup poll found that only 63 percent of Americans say they are willing to be inoculated against the disease. Many of those who don’t want to get vaccinated will soon find out that they work for an employer who feels differently. Those employers may also tell them that they either need to get the vaccine or need to find a new job. And, in most cases, employers may be well within their rights to terminate employees who refuse to take the COVID-19 vaccine. Mandatory Vaccinations Are Not New Companies that have spent the better part of the year – and lots of money - trying to keep their workplaces COVID-free see the vaccine as the apex of those efforts. With a fully vaccinated workforce, business owners can operate without disruption and provide employees, customers, clients, and patients with confidence and peace of mind. But all of those benefits of the vaccine only accrue to fully vaccinated workforces. So, many companies may mandate that employees get their shot as a condition of continued employment. By doing so, they are following a legally sound path that predates the current pandemic. Well before anyone had heard of coronavirus, plenty of employers, primarily in the health care sector, required employees to get the flu vaccine and vaccinations against other infectious diseases. Most public school districts also require proof of vaccinations before a student can enroll and attend classes. Since most employees in Illinois work on an “at-will” basis, they can face termination for almost any reason not expressly prohibited by federal, state, or local laws. Generally, no law stands in the way of an employer requiring the COVID-19 vaccine for its workers. ADA and Religious Exceptions However, employers who make vaccines mandatory need to be mindful that employees with legitimate health or religious concerns about the vaccine may be protected from termination and other adverse employment actions if they refuse the shot. But these exceptions don’t necessarily apply just because someone doesn’t believe in vaccines generally (“anti-vaxers”) or thinks that forcing them to get vaccination is an infringement on their liberties. Employees who have a disability recognized under the Americans with Disabilities Act (ADA) that prevents them from taking the coronavirus vaccine cannot be forced to get the vaccine, so long as their exemption does not impose an “undue hardship” on the employer. Such disabilities in this context may include a compromised immune system or an allergy to an ingredient in the vaccine. While there has been no definitive guidance on the subject, one could credibly argue that an employee’s refusal to get vaccinated is an “undue hardship” if it places the health and safety of other employees and visitors at increase risk of infection. Even in such cases, however, an employer may need to make a “reasonable accommodation” for the employee, such as allowing them to work from home. Similarly, the anti-discrimination provisions of Title VII of the Civil Rights Act of 1964 may protect a worker if their “sincerely-held religious beliefs” preclude them from getting a vaccination. Such beliefs do not include political or personal views. The burden is on the employee to demonstrate the legitimacy of their religious objections to the vaccine. More Than Legal Issues To Consider Even when an employer is within their legal rights to require employees to get the COVID-19 vaccine, other considerations may weigh against such a mandate. For example, they may need protection against an employee who has an adverse reaction, even if they signed a waiver upon receiving the shot. A vaccination requirement may also get an adverse reaction from employees generally as well as the general public if it seems heavy-handed and overreaching. Of course, those that decide against a mandate face risks if someone does contract the coronavirus in the workplace and sues. Please Contact Grogan Hesse & Uditsky With All Of Your COVID-Related Employment Questions If you have questions or concerns about how to handle vaccinations or other employment issues related to COVID-19, please call us at (630) 833-5533 or contact us online to arrange for a consultation.

Are You Eligible for the Second Round of PPP Loan Forgiveness?

By nat rosasco • January 11, 2021
The Paycheck Protection Program (PPP) is back , offering a second round of loan forgiveness to new borrowers and qualified second-time PPP borrowers. The second round of PPP loans has earmarked up to $284 billion to support business owners' payroll costs and other eligible expenses through March 31, 2021. Loans will be available to first-time participants on Monday, January 11, and existing PPP participants on Wednesday, January 13. First Draw PPP Loan Eligibility Borrowers that did not participate in the first round are generally eligible for a First Draw PPP Loan if they were in operation on February 15, 2020, and fall into one of the following categories: Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans. Eligible self-employed individuals (including sole proprietors and independent contractors). Non-profit organizations, including churches. Accommodation and food services operations with no more than 500 employees per location. Sec. 501(c)(6) business leagues with no more than 300 employees that do not receive more than 15% of its income from lobbying. Qualifying news organizations with 500 or fewer employees per location. Second Draw PPP Loan Eligibility Existing PPP participants are generally eligible for a Second Draw PPP Loan if the borrower: Used or will have used its First Draw PPP Loan as authorized. Has no more than 300 employees. Can prove it has suffered at least a 25% reduction in gross income between the same quarters in 2019 and 2020. Our team is committed to monitoring new developments with the PPP and providing you with the information you need. It is essential that your small business consults with knowledgeable corporate attorneys , financial advisors, and accountants on your PPP eligibility and forgiveness applications. If you have any questions about the new eligibility requirements or any other issues involving the PPP, please feel free to call or email us.

Amendments to PPP Loan Forgiveness

By nat rosasco • June 5, 2020
Many businesses that received Paycheck Protection Program (“PPP”) funds are coming to the end of their respective eight-week time periods (“Expenditure Period”) during which they must use the PPP funds to obtain forgiveness under the CARES Act. Unfortunately, many of these businesses have found it difficult to reopen and remain fully operational throughout the Expenditure Period and consequently to meet spending thresholds necessary to obtain full forgiveness. Luckily for these businesses, some much needed flexibility is on its way. Paycheck Protection Program Flexibility Act On June 5th, the Paycheck Protection Program Flexibility Act (“PPPFA”) was signed into law. The PPPFA made the following changes relevant to PPP loan forgiveness: Extends the Expenditure Period from eight weeks to the earlier of twenty-four weeks from the date of the loan origination or December 31, 2020. Reduces the required payroll spending amount to a minimum of 60% on payroll instead of the current 75% minimum requirement. This would allow businesses to use the remaining 40% of the PPP funds on rent and other operational items as needed. Extends the deadline for workers to be able to be rehired to December 31, 2020 instead of the current cutoff of June 30, 2020. Extends the PPP loan to a five-year term instead of the current two-year term. As any amendments governing the use and repayment of PPP loans may be vital to a small business’ ability to continue to operate and successfully plan for the future, our team will continue to keep you up to date on the on-going developments. As always, it is important to consult with informed attorneys, financial advisors, bankers and accountants on how best to use your PPP funds. Should you have any questions, don’t hesitate to call or email us.
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