Insurer Client Pays Nothing at Mediation

Stephanie Andersen represented an insurer in an additional insured matter involving water damage at an apartment complex. The work of her client’s named insured, a subcontractor, and additional insured, a general contractor (“GC”), allegedly caused water damage there. The apartment owner sued the GC for property damage. The insurer was concerned the owner would take a covenant judgment against the GC, who would have been an additional insured under our client’s policy but for the policy’s “ongoing operations” endorsement. (It was clear the damage related to the subcontractor’s work did not occur until after the project had finished so per Washington law, the “ongoing operations” endorsement did not apply.) To prevent a covenant judgment, Ms. Andersen counseled her client to defend the GC for the subcontractor’s negligence not under the policy, but instead under the named insured’s subcontract.  In the end her client paid nothing to settle the AI claim in the underlying lawsuit; the named insured’s insurer paid for damage caused by its work and the GC’s insurer paid for damage caused by its failure to supervise/mitigate.