The Indiana Court of Appeals in Walsh Construction Co. v. Zurich American Insurance Co. 2017 WL 1151033 (IN Ct App March 28th 2017) acknowledged that under Indiana law in situations that arise between the insurer and the named insured, the insurer’s responsibility is to defend and indemnify the named insured only after the SIR has been satisfied and exhausted. However, the question of whether a SIR endorsement applied only to the insurers relationship to the named insured or whether it also applied to an additional insured was resolved in the Walsh case as a question of first impression.
The SIR endorsement issued by Zurich stated that the name insured’s compliance with the SIR was a condition precedent to coverage. The SIR endorsement language also prioritized Zurich’s obligation indicating that if there was any conflict between the SIR endorsement language and any of the policy provisions, the SIR endorsement language took precedents. The court then held that Zurich had no obligation under the policy to defend or indemnify an additional insured until the name insured had satisfied the $500,000 SIR amount. The Court could find no rational basis to apply the SIR endorsement as a condition to precedent Zurich’s coverage for the named insured and then not to Zurichs coverage for additional insureds.