Case About ”Who Is An Insured” Definition In An Insurance Police

In Prisco Serena Sturm Architects, Ltd. v. Liberty Mutual Insurance Co., 126 F.3d 886 (7th Cir. 1997) a school hired Prisco Serena Sturm Architects, who was responsible for both design and construction of the school. Prisco, 126 F.3d at 888.

The school then hired Axelrod Construction to act as a general contractor. Prisco, 126 F.3d at 888. Axelrod was required to procure a CGL policy, naming both the school and Prisco as insureds, which it obtained through Liberty Mutual. Prisco, 126 F.3d at 889.

The school filed a lawsuit against Axelrod, alleging its performance was unsatisfactory and resulted in damage to the school. Prisco, 126 F.3d at 888.

In addition, the school alleged a claim against Prisco, maintaining that it was responsible for the same damage because "allegedly it had failed to find out that the quality of Axelrod's work did not conform to the contract, it had failed to ascertain that Axelrod's work was not proceeding in accordance with the contract, it had not kept the School correctly informed about the quality of Axelrod's work, and it had failed to guard against defects and deficiencies in Axelrod's performance." Prisco, 126 F.3d at 888.

Prisco tendered its defense to Liberty Mutual.

Thereafter, a coverage dispute began between the parties.

The district court, through a series of orders, granted summary judgment in favor of Prisco. Prisco, 126 F.3d at 888.

Liberty Mutual then appealed to the Seventh Circuit Court of Appeals.

In addressing the claim before it, the Seventh Circuit first concluded that "many of the policy provisions on which Liberty relies are ambiguous and must, therefore, be construed to provide coverage." Prisco, 126 F.3d at 888.

The court then reviewed the policy at issue, noting that the body of the coverage was included in standard form CG 00 01 11 88.

The court then noted that several special endorsements were also relevant.

First, an "Additional Insured-Engineers, Architects/or Surveyors" endorsement modified the general body of the policy, Section II, "WHO IS AN INSURED," which stated that "The insurance with respect to such architects, engineers, or surveyors does not apply to 'bodily injury,' 'property damage,' arising out of the rendering of or the failure to render any professional services by or for you, including: supervisory, inspection, or engineering services." Prisco, 126 F.3d at 889.

Secondly, an "Additional Insured-Designated Person or Organization" endorsement also amended section II, "WHO IS AN INSURED," and stated, "as an insured the person or organization shown in the Schedule as an insured but only with respect to liability arising out of your operations." Prisco, 126 F.3d at 889.