Authors: Andrew J. Muha Douglas R. Widin

Using the “four corners” rule, the U.S. Court of Appeals for the Third Circuit decided in Ramara Inc. v. Westfield Insurance Co., No. 15-1003 (3d Cir. Feb. 17, 2016), that an insurer owed a garage owner a duty to defend because it was an “additional insured” under a subcontractor’s commercial general liability policy. The Third Circuit held that duty was triggered because — applying either a “but-for” causation standard or the more demanding “proximate” causation standard — the bodily injury alleged in the underlying complaint was “caused” by the subcontractor’s acts or omissions. Ultimately agreeing that “but-for” causation was the relevant standard, the court considered not just the policy’s “additional insured endorsement” but another policy provision, explaining that courts must construe the policy “as one harmonious document.” The Third Circuit also addressed the propriety of recognizing the impact of the Pennsylvania Workers Compensation Act in applying the “four corners” rule, holding that, in assessing coverage, an insurer cannot ignore the impact the act may have on plaintiffs counsel’s drafting of a personal-injury complaint. “[A]n insurer cannot bury its head in the sand,” the court cautioned, “and disclaim any knowledge of coverage-triggering facts."

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