Why additional insured provisions matter

March 3, 2026 By John McCoy 0 Comments

An appellate court decision out of Georgia highlights the importance and complexity of having contractual provisions requiring coverage as an additional insured.

The case is Atlanta Gas Light Co. and Southern Gas Co. (AGL) v. Navigators Insurance.

The case that gave rise to the appeal was from an explosion in August of 2018. AGL had contracted with a utility line marking company, USIC, to mark the gas lines that it owned throughout Georgia. Unfortunately, USIC failed to mark one of AGL’s lines in Homerville, Georgia. A company doing cross-directional boring hit the unmarked gas line, and the subsequent explosion severely injured three women.

Prior to filing a lawsuit, these women participated in a mediation with AGL and USIC. The women were able to settle with USIC at mediation, but they did not settle with AGL at mediation. The women then filed suit and reached a settlement with AGL.

AGL’s service agreement with USIC required it to list AGL as an additional insured for liability purposes on its primary and excess insurance policies. USIC’s settlement with the three women exhausted its primary insurance policy. So, AGL sought defense and indemnity from Navigators Insurance, USIC’s excess insurer.

Navigators denied the tender of AGL, taking the position that AGL did not qualify as an “additional insured” under its policy of insurance, as the lawsuit only named AGL, not USIC. It did not name USIC, as it had settled with the plaintiffs prior to any lawsuit being filed.

AGL then sued Navigators, alleging it had violated its contract of insurance by failing to defend AGL at mediation, breached its contract, breached its fiduciary duty and breached its duty to deal with AGL in good faith. Navigators filed motions to dismiss these claims. Over a series of motions, the trial court dismissed all claims but the breach of contract claim.

The trial court analyzed the breach of contract claim by deciding that AGL was an “additional insured” under the excess policy. The parties agreed to seek a final judgment that AGL was an “additional insured” under Navigators’ policy, but reserved the right of both parties to appeal the decisions of the trial court.

Navigators’ policy followed form in adopting the definition of “additional insured” under the primary insurance policy with Zurich. This definition provided this status apart from any written contract or written agreement.

Navigators’ initial denial of coverage to AGL noted that its umbrella policy only provided coverage as an “additional insured” with respect to liability for bodily injury “… caused in whole or in part by [USIC’s] acts or omissions.” It viewed the underlying lawsuit as being solely against AGL for its negligent conduct. No wrongdoing was alleged against USIC. So, coverage was not available to AGL under its policy.

The appellate court analysis upheld the trial court’s decisions. It agreed that at mediation, the underlying primary policy had not been exhausted, so the duty to defend AGL had not been triggered. As to the breach of fiduciary duty and bad faith claims, the appellate court agreed there was no evidence to support either claim. It properly investigated the claim and had a good-faith defense to support its various positions throughout the process.

As to the breach of contract claim, the trial court decided that AGL was an “additional insured” under Navigators’ policy. It ultimately paid $13.8 million to settle the lawsuit against AGL. It agreed with the trial court that the facts of this case were “in whole or in part” caused by the negligent acts of USIC. Even if the lawsuit only named AGL, it cannot be ignored that USIC failed to mark the utility line that was struck.

This decision provides a good reminder to look at contracts that you are a party to for indemnity language. If you are subcontracting work to others, it is an important provision to include in your contracts. The language of these provisions is closely analyzed in litigated cases to determine if it is enforceable.

If you are entering into contracts with these provisions, you will want to have your legal counsel analyze them to limit the scope, if possible. If you are required to list a party as an additional insured for liability on your commercial general liability policy, be sure to inform your insurance agent of this requirement and incorporate the cost into the contract bid.

John V. McCoy is with McCoy, Leavitt, Laskey LLC. His firm represents industry members nationally. He can be reached at jmccoy@MLLlaw.com or at 262-522-7007.

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