Is Failure to Purchase Requisite Insurance As Directed by the Contractor Considered a Breach of Contract ?
In Lehman v. IBP, Inc., 265 Ill. App. 3d 117, 123, 639 N.E.2d 152, 203 Ill. Dec. 113 (1994) a contractor required the subcontractor to purchase insurance to protect the general contractor from liability "'resulting from the intentional and/or negligent acts or omissions'" of the subcontractor. Lehman, 265 Ill. App. 3d at 121. When an injured worker sued the general contractor for violations of the Structural Work Act, the general contractor discovered that the subcontractor failed to name it as an additional insured under the policy it purchased.
The general contractor sued the subcontractor for breach of the contract by failing to purchase the requisite insurance.
The trial court dismissed the lawsuit and the appellate court reversed.
The court held that the contract required the subcontractor to purchase insurance protecting the general contractor from liability resulting from the subcontractor's conduct, and the general contractor's liability under the Structural Work Act qualified for the insurance. Lehman, 265 Ill. App. 3d at 121-22.
The difference between a contract to indemnify and a contract to procure insurance made Motor Vehicle inapplicable. Lehman, 265 Ill. App. 3d at 122.