United States: General Contractors Beware: Coverage Under Additional-Insured Endorsement To Subcontractor’s CGL Policy May End When Subcontractor’s Work Is Complete

Last Updated: May 6 2014
Article by Slates Veazey

Within the past four months, two courts interpreting Mississippi law have held that an additional-insured endorsement to a subcontractor's commercial general liability (CGL) insurance policy did not obligate the insurer to defend and/or indemnify a general contractor additional insured for liability arising after the subcontractor completed its work. See Carl E. Woodward, LLC v. Acceptance Indem. Ins. Co., --- F.3d ----, 2014 WL 535726 (5th Cir. February 11, 2014) (the Fifth Circuit is currently considering a petition for rehearing filed by Woodward); Noble v. Wellington Assocs., Inc., --- So.3d ----, 2013 WL 6067991 (Miss. Ct. App. Nov. 19, 2013) (the Mississippi Court of Appeals is currently considering a petition for rehearing filed by Noble). These holdings may impact any general contractor's reliance on insurance coverage under an additional-insured endorsement to a subcontractor's CGL policy, and may require a more proactive insurance approach before a project begins.

Although Carl E. Woodward involved the construction of condominiums and Noble arose out of the construction of a home, each case exemplifies how Mississippi courts are interpreting particular additional insured endorsements to CGL policies. In both cases, the general contractor sought insurance coverage from the CGL carrier, which issued a CGL policy to the particular subcontractor. And in each CGL policy, the additional-insured endorsement provided coverage only for liability arising out of the "ongoing operations" of the subcontractor.

   A. Carl E. Woodward, LLC v. Acceptance Indem. Ins. Co., --- F.3d ----, 2014 WL 535726 (5th Cir. February 11, 2014)

In Carl E. Woodward, Carl E. Woodward, LLC ("Woodward"), the general contractor on a project for the construction of condominiums, hired subcontractor DCM Corporation, LLC ("DCM") to perform the concrete work. The additional insured endorsement to the CGL policy that DCM obtained, which named Woodward as an additional insured, states that Woodward was an insured, "but only with respect to liability arising out of [the subcontractor's] ongoing operations performed for that insured" (i.e., Woodward). The policy went on to exclude coverage for "'property damage' occurring after: (1) All work . . . on the project . . . to be performed by or on behalf of the additional insured(s) at the site of the covered operations has been completed."

The underlying claims at issue in the case involved allegations by the owner of condominiums that construction of the foundation piers was defective. In determining whether the claims gave rise to coverage under the additional-insured endorsement of the CGL policy, the Fifth Circuit described "the central issue [as] whether Woodward's liability arose out of [the subcontractor's] ongoing operations or its completed operations." Viewing the plaintiff's claims as alleging a construction defect and not as alleging any other damage occurring during construction, the court held that the liability, if any, necessarily arose out of the subcontractor's completed operations. As such, the court held that the general contractor did not have coverage under the additional insured endorsement to the CGL policy.

   B. Noble v. Wellington Assocs., Inc., --- So.3d ----, 2013 WL 6067991 (Miss. Ct. App. Nov. 19, 2013)

In Noble, a case on which the Fifth Circuit relied in Carl E. Woodward, Noble Real Estate ("Noble") hired subcontractor Harris Construction Company ("Harris") to perform dirt work and site preparation on a new home project. The additional-insured endorsement to the CGL insurance policy that Harris obtained, which named Noble as an additional insured, provided coverage for "liability . . . caused in whole or in part by [Harris'] ongoing operations performed for [Noble]" but excluded, in part, coverage for "'property damage' occurring after":

(1) All work ... on the project ... [was] performed by or on behalf of the additional insured[s] at the site where the covered operations have been completed; or

Harris completed its work in March of 2006, Noble then built a house on the site, and the home was purchased in September of 2007 The purchasers eventually sued Noble, alleging that foundation issues related to faulty dirt work caused cracks in the home. Noble sought coverage under the additional-insured endorsement, but the insurer denied coverage. Noble then commenced suit against the insurer.

The Mississippi Court of Appeals affirmed the trial court's order granting the insurer's request to dismiss Noble's suit before trial, finding that "the endorsement protected Noble against lawsuits arising out of accidents occurring during the time Harris performed dirt work—it was not a performance bond guaranteeing Harris's dirt work." The court's holding rested on its interpretation of the phrase "ongoing operations" in the endorsement. Noting that neither the policy nor the endorsement defined the phrase and no Mississippi appellate court had interpreted it, the court of appeals looked to other jurisdictions for support.

In doing so, the court of appeals concluded that "in order for 'ongoing operations' to have any meaning, it cannot encompass liability arising after the subcontractor's work was completed." Accordingly, the court found that "[b]ecause the endorsement was clear that it only covered liability that arose from 'ongoing operations,' and because the homeowners' damage did not arise until well after Harris had completed its operations, the homeowners' claims against Noble did not trigger coverage under the additional-insured endorsement."

   C. A Causal Connection to the Subcontractor's Ongoing Operations Is Not Enough.

Both courts addressed and rejected arguments that because the alleged damage was causally related to the subcontractor's ongoing operations, coverage was required. The Noble court opined that accepting that argument would "read the word 'ongoing' out of the endorsement and find that Noble is covered for liability caused by Harris's operations—active and completed." The court went on to illustrate the type of accident it believed would be covered by such an endorsement: "Had Harris accidentally knocked over a neighbor's tree with a bulldozer or cut a gas line while performing dirt work, Noble would be covered for any resulting liability."

Similarly, the Fifth Circuit in Carl E. Woodward stated that "[t]hough a causal relation is required [and exists in this case], the policy specifically excludes liability for property damage occurring after all work has been completed."

   D. How Do These Decisions Affect a General Contractor's Business Practices?

So, what can a general contractor or other entity or individual take away from these decisions when seeking coverage through another's CGL policy? First, be aware that if such policy contains language restricting coverage to liability caused by the subcontractor's "ongoing operations" and excluding coverage for "completed operations," your coverage may be limited only to property damage or bodily injury that occurs while the subcontractor is actively working on the project.

Second, you should protect your future, potential liability by attempting to obtain coverage for property damage caused by the subcontractor's "completed work" rather than "ongoing operations." To ensure coverage is in place, you may want to request to see a copy of the endorsement or endorsements being considered by the subcontractor. Remember that a certificate of insurance alone does not establish coverage. And, depending on the project and potential exposure, you may want to be more involved in discussions with the insurance agent or broker.

Finally, care should be taken when selecting the language to be included in the subcontract regarding the subcontractor's obligations to provide insurance coverage. The intent of the parties to the subcontract should be clearly stated.

Originally posted 4/1/14

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions