Do insurance policy exclusions apply to additional insureds the same as named insureds? America First Credit Union v. Kier Construction Corp. Explained

In America First Credit Union v. Kier Construction Corp., the Utah Court of Appeals clarified a crucial distinction in commercial general liability insurance policies between named insureds and additional insureds, reversing a trial court’s coverage determination.

Background and Facts

America First Credit Union contracted with Kier Construction to build a branch office. Kier subcontracted the stone veneer work to Broberg Masonry, which obtained a CGL policy from Owners Insurance Company and added Kier as an additional insured. When the stone veneer failed, AFCU sued Kier for breach of contract, and Kier sought coverage under Broberg’s CGL policy. The trial court denied Owners’ summary judgment motion, finding coverage existed.

Key Legal Issues

The primary issue was whether policy exclusions for damage to “your work” and “your product” applied to bar coverage. This turned on interpreting who “you” referred to in the policy language—Broberg as the named insured or Kier as an additional insured.

Court’s Analysis and Holding

The Court of Appeals reversed, applying the correctness standard of review for contract interpretation. The court emphasized that insurance policies are contracts subject to ordinary contract interpretation rules. The policy explicitly stated that “‘you’ and ‘your’ refer to the Named Insured shown in the Declarations.” Since only Broberg was listed as the named insured in the declarations, and Kier was merely an additional insured through endorsement, the terms “you” and “your” referred exclusively to Broberg. Therefore, the exclusions for damage to “your work” and “your product” applied to Broberg’s stone veneer work, barring coverage.

Practice Implications

This decision highlights the critical importance of carefully analyzing policy definitions when determining coverage. Practitioners must distinguish between named insureds and additional insureds, as this distinction directly affects how exclusions apply. The ruling also demonstrates that even when work is performed by a subcontractor on behalf of the general contractor, coverage may still be excluded if the exclusions are properly interpreted from the named insured’s perspective rather than the additional insured’s perspective.