Failure to Pay Attention to Additional Insured Agreement is Expensive Read the full article at https://www.linkedin.com/pulse/deepwater-horizon-litigation-continues-resolve-issues-barry and at https://zalma.com/blog plus more than 4050 posts. In the latest installment of litigation spilling out of the Deepwater Horizon offshore explosion and fire centers on who should pay for personal injury claims brought by employees of two companies hired by BP Exploration & Production Inc. and BP America Production Company (“BP”) to clean up the oil spill. BP retained the Responders for nearly $2 billion to assist with cleanup efforts in the aftermath of the April 2010 Deepwater Horizon oil spill. BP and O’Brien’s executed a Bridge Agreement in 2010 that incorporated, with modifications, a Master Consulting Services Contract they originally entered into in 2004 (the “BP-O’Brien’s Contract”). O’Brien’s is a named insured on two pertinent policies with excess coverage up to $90,000,000. DISCUSSION BP seeks coverage as an “additional insured” under the Primary and Excess Bumbershoot policies covering O’Brien’s. BP contends it is entitled to the full $100,000,000 under these policies notwithstanding that Section 12.01.03 required O’Brien’s to purchase CGL with “minimum limits” of $2 million per occurrence. Although the district court correctly concluded that BP was only an additional insured with respect to the $2,000,000 obligated by the BP-O’Brien’s Contract, it erred in concluding that amount was fully satisfied by the Starr and COPS policies (each bearing $1,000,000 coverage limits per occurrence). BP is entitled to $2 million of coverage. Finally, the breach was material because the Medical Settlement undisputedly compromised the defense of BELO claims. Because BP’s breach was material, O’Brien’s is not required to indemnify the BELO claims. ZALMA OPINION When a party enters into a major contract requiring a vendor to add the other party as an additional insured it is important to carefully write the insurance provisions of the contract. BP made the mistake of setting a minimum amount of insurance that, as a matter of law, became the maximum when it could have simply said that the vendor name BP as an additional insured on all insurance coverage available. By failing to do so the bumbershoot policies were able to avoid putting $100 million in coverage at risk to BP. © 2022 – Barry Zalma Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome. You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, [email protected] and [email protected].