In Virginia Surety Co. v. Northern Insurance Co. of New York, 224 Ill. 2d 550, 556, 866 N.E.2d 149, 310 Ill. Dec. 338 (2007), the supreme court resolved "the split in the appellate districts" on what constitutes an "'insured contract.'" Virginia Surety Co., 224 Ill. 2d at 555. An insured contract was defined as "'that part of any other contract or agreement pertaining to your business under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.'" Virginia Surety Co., 224 Ill. 2d at 553. In Virginia Surety, the case pitted the subcontractor's workers' compensation carrier, Virginia Surety, against its CGL carrier, Northern Insurance. An employee of the subcontractor was injured; he filed suit against the general contractor, who in turn filed a third-party action against the subcontractor. The subcontractor tendered its defense to each carrier: Virginia Surety accepted; Northern Insurance rejected. Cross-complaints for declaratory judgment were filed. The circuit court found no duty to defend on the part of Northern Iinsurance; the appellate court affirmed; the supreme court granted leave to appeal. Before the supreme court, the dispute centered on the significance of the "insured contract" provision. The general contractor and the subcontractor had entered into an agreement whereby the subcontractor waived any right of contribution against the general contractor, among others (waiver agreement). Virginia Surety Co., 224 Ill. 2d at 553. The CGL policy issued by Northern Insurance contained the standard bar to coverage for personal injury suffered by an employee of its principal insured, the subcontractor. The question before the supreme court was whether the waiver agreement between the general contractor and the subcontractor constituted an "insured contract" as provided by the CGL policy issued by Northern Insurance. That is, whether the "'liability assumed by the insured,'" the subcontractor, in the waiver agreement with the general contractor "'would be imposed by law even in the absence of the waiver agreement.'" Virginia Surety Co., 224 Ill. 2d at 553. The parties do not dispute that this "imposed by law" exception to the exclusion from coverage under the CGL policy issued by Northern Insurance is identical to the American Family CGL policy exception that it will pay for "liability for damages that the insured would have in the absence of the contract or agreement." In Virginia Surety, the lower courts found the CGL carrier, Northern Insurance, did not assume the risk to provide coverage for the liability accepted by the subcontractor in the waiver agreement with the general contractor in which it gave up its right to protect itself from a contribution claim from the general contractor, in the event one of the subcontractor's employee was injured at the jobsite, as turned out to be the case. In this regard, the supreme court noted that absent a waiver agreement between the general contractor and the subcontractor, as the employer of the injured worker, the maximum liability in a third-party suit for contribution is limited to the subcontractor's liability to its employee under the Workers' Compensation Act (820 ILCS 305/5(a) (West 2006)) as the court held in Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155, 164-65, 585 N.E.2d 1023, 166 Ill. Dec. 1 (1991). Virginia Surety Co., 224 Ill. 2d at 568. But, of course, the subcontractor as "employer may waive its Kotecki protection by contract and thereby be liable for its full pro rata share of contribution." Virginia Surety Co., 224 Ill. 2d at 558. The question raised by the dispute between the workers' compensation carrier and the carrier of the CGL was whether the portion of the subcontractor's "liability above the Kotecki cap" was imposed by law on the subcontractor or on the general contractor. Virginia Surety Co., 224 Ill. 2d at 566.