Can An Independent Contractor Obtain Liability Insurance Naming the Owner of a Premises As An Additional Insured ?
In Brzeczek v. Standard Oil Co. (1982), 4 Ohio App.3d 209, 213, the court of appeals held that a provision in a construction (or maintenance) contract requiring that an independent contractor obtain liability insurance naming the owner of a premises as an additional insured is not null and void due to application of R.C. 2305.31.
In Brzeczek, an original action was instituted by an employee of Tulsa Tank Cleaning Company ("Tulsa Tank") who was injured while working at Standard Oil Company ("Standard Oil") when hot asphalt spilled on his legs and body. Id. at 209.
The employee alleged that his injury was the result of the negligence of Standard Oil. Id.
Pursuant to a contractual agreement, Standard Oil requested that Tulsa Tank defend the action and hold Standard Oil harmless, Id.
The contractual agreement provided that Tulsa Tank, as an independent contractor, would clean and remove sludge from the tanks or vessels located on Standard Oil's premises. Id.
The contract included an indemnification clause and also included a requirement that Tulsa Tank obtain insurance coverage including comprehensive general liability insurance naming Standard Oil as an additional insured on the policy, Id. at 210.
The trial court found that the requirement for Tulsa Tank to purchase insurance and include Standard Oil as an additional insured was void pursuant to R.C. 2305.31. Id.
The court of appeals reversed, stating:
We do not read R.C. 2305.31 as voiding the insurance contracts procured by Tulsa Tank, wherein Standard Oil is an additional insured.
The trial court's interpretation would preclude the naming of more than one insured per insurance policy.
Such a restriction was clearly not the intent of the legislature. It is common practice to name several parties as insureds in a policy, each having different liabilities. Id. at 212.
The issue of whether requiring an independent contractor to add a property owner as an additional insured on its commercial general liability policy was also raised in Stickovich v. City of Cleveland (2001), 143 Ohio App.3d 13.
Although the court of appeals did not ultimately decide this issue, finding that it was an affirmative defense that had been waived by the insurer, the court noted the following:
It is a fiction to suggest that a contractor indemnifies the property owner by naming it as an additional insured on a liability insurance policy.
The commercial liability insurer has a separate and independent duty under the insurance contract on which the owner is named as an additional insured, but the contractor does not either:
(1) enter into an indemnity agreement or;
(2) agree to indemnify the owner under the insurance contract simply by requesting that it be named as an insured on a liability insurance policy. Id. at 66.