MAY 2007 BAD FAITH CASES
BAD FAITH CLAIM DISMISSED SINCE GENERAL CONTRACTOR NOT NAMED AS AN ADDITIONAL INSURED DUE TO PROPERTY USE EXCLUSION
May 10, 2007
In Penn National Insurance v. HNI Corp., a new model home was destroyed by a fire allegedly due to the negligent installation of a gas fire place. The subcontractor who had installed the fire place was insured by Penn National. Citing to an indemnification provision in the agreement between the general contractor and the subcontractor, the general contractor argued that it was an additional named insured under the subcontractor’s insurance policy and submitted a claim to Penn National for defense and indemnification due to litigation stemming from the fire. Penn National denied the claim. The general contractor subsequently filed suit against Penn National asserting, among other claims, a bad faith claim. The United States District Court for the Middle District of Pennsylvania the District Court, however, adopted the findings of the Magistrate Judge and held that the general contractor was not entitled to coverage under a subcontractor’s insurance policy. The Court held that the general contractor was not an additional named insured under the Policy. Further, the Court opined, that the general contractor was not entitled to coverage under the automatic additional insureds endorsement under the policy because the policy also contained an exclusion for property damage occurring after that portion of the work “which the injury or damages arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as part of the same project.” Finding that the owner of the home had already put the gas fire place to use, the Court held that the policy exclusion applied and dismissed the general contractor’s bad faith claim against Penn National.
Date of Decision: April 20, 2007.
Penn National Insurance Company v. HNI Corp., No. 1:05-cv-2096, 482 F. Supp. 2d, 568, 2007 U.S. Dist. LEXIS 29291 (M.D. Pa. April 20, 2007) (Jones III, J.)
Posted in PA - General Bad Faith and Litigation Issues