FOR PUBLICATION

ATTORNEYS FOR APPELLANTS: ATTORNEYS FOR APPELLEES:

MARK R. SMITH JOSEPH M. DIETZ

Smith Fisher Maas & Howard, P.C. ANDREW M. SUMERFORD

Indianapolis, Indiana RICK D. MEILS

Attorney for West Bend Mutual WILLIAM M. BERISH

Insurance Company Meils Thompson Dietz & Berish

Indianapolis, Indiana

ANDREW B. JANUTOLO Attorneys for MacDougall Pierce

JON C. ABERNATHY Construction, Inc.

Goodin Abernathy, LLP

Indianapolis, Indiana STEPHEN J. PETERS

Attorneys for K.B. Electric, LLC DAVID I. RUBIN

Harrison & Moberly, LLP

Indianapolis, Indiana

Attorneys for Amerisure Insurance 

Company

IN THE

 COURT OF APPEALS OF INDIANA

WEST BEND MUTUAL INSURANCE )

COMPANY and K.B. ELECTRIC, LLC, )

)

Appellants, )

)

vs. ) No. 06A01-1304-CT-162

)

MACDOUGALL PIERCE )

CONSTRUCTION, INC., AMERISURE )

INSURANCE COMPANY, et al., )

)

Appellees.

1

)

APPEAL FROM THE BOONE SUPERIOR COURT

The Honorable Matthew C. Kincaid, Judge

Cause No. 06D01-1101-CT-45 

June 10, 2014

OPINION – FOR PUBLICATION2

KIRSCH, Judge

 

1

 Because of the number of claims of the various parties, we refer to them as appellants and 

appellees in the caption with further explanation of their claims and statuses later in this opinion. 

2

 We held oral argument in this case on March 12, 2014 in the Indiana Court of Appeals 

Courtroom in Indianapolis, Indiana. We commend counsel for the quality of their written and oral 

advocacy. 
2

After he sustained serious injuries through electrocution at the site of a 

construction project, James Wethington, an employee of K.B. Electric, LLC, filed a 

lawsuit against various defendants seeking compensation for his injuries. West Bend 

Mutual Insurance Company and K.B. Electric appeal from the trial court’s order, which 

disposed of motions for summary judgment, and in which the trial court entered a 

declaratory judgment in favor of Amerisure Insurance Company and against West Bend 

regarding indemnification clauses and coverage under the available insurance policies. 

The following restated issues are presented for our review:

I. Whether the trial court erred by granting summary judgment in favor 

of Amerisure and MacDougall Pierce Construction Inc., its insured, 

based upon the following determinations:

A. West Bend had the sole primary duty under its 

Commercial General Liability (“CGL”) policy to 

defend or indemnify Wal-Mart against Wethington’s 

claims; 

B. West Bend had the sole primary duty under its 

CGL policy to defend or indemnify MacDougall 

against Wethington’s claims;

C. West Bend’s umbrella coverage provided coverage

to Wal-Mart and MacDougall with respect to

Wethington’s claims;

D. West Bend’s Umbrella Policy was primary to 

Amerisure’s CGL policy for purposes of Wethington’s 

claims against Wal-Mart and MacDougall;

E. K.B. Electric had a duty under a Subcontract’s 

indemnification provision to defend or indemnify 

MacDougall against Wethington’s claims; and

F. West Bend had a duty under its CGL and umbrella 

policies to defend or indemnify K.B. Electric against 

MacDougall’s third-party complaint for 

indemnification.
3

II. Whether the trial court’s determination on the duty to indemnify was 

premature;

III. Whether the Subcontract is an insured contract under the Contractors 

Businessowners Policy issued by West Bend to provide CGL 

coverage to K.B. Electric and the Commercial Umbrella Policy 

issued by West Bend to K.B. Electric; and

IV. Whether the trial court correctly determined that the anti-subrogation 

rule applies to West Bend’s claims.

We affirm.

FACTS AND PROCEDURAL HISTORY

On June 26, 2008, Wal-Mart hired MacDougall as the general contractor for the 

construction of a Wal-Mart SuperCenter in Lebanon, Indiana (“the Project”). K.B. 

Electric was a subcontractor selected by MacDougall to perform electrical work at the 

Project. Wethington was employed by K.B. Electric on June 10, 2009, when he was 

injured at the Project site while working in the scope of his employment. Wethington 

filed a complaint against various defendants seeking compensation for his injuries, which 

were catastrophic. 

The Prime Contract between Wal-Mart, the owner of the property, and 

MacDougall consisted of an AIA Document A201-1997 general conditions document, 

and included supplementary conditions requiring MacDougall to purchase and maintain, 

until full performance of the contract, “[CGL] insurance . . . with minimum limits of 

$2,000,000 per occurrence, $3,000,000 general aggregate,” “Umbrella/Excess Liability 

Insurance with minimum limits of $5,000,000,” and to name Wal-Mart as an “additional 

insured,” on both policies on a “primary” and “noncontributing” basis. The

Supplementary Conditions provided that MacDougall’s insurance policies could not 
4

exclude coverage for Wal-Mart’s independent negligence.

MacDougall entered into a construction subcontract with K.B. Electric for 

electrical work at the Project. Several of the provisions of the Subcontract are relevant to 

the issues on appeal and are reproduced here. The Subcontract explicitly refers to the 

Prime Contract in paragraph 23, a “flow-down” provision, as follows:

23. GENERAL CONTRACT:

To the extent of the work to be performed by [K.B. Electric], [K.B. 

Electric] is bound to [MacDougall] by terms of the contract documents 

between [MacDougall] and [Wal-Mart] and assumes toward [MacDougall] 

all the obligations and responsibilities which [MacDougall], by those 

documents, assumes toward [Wal-Mart] and Architect. All rights of [WalMart] and Architect under the contract documents are preserved with 

respect to the work to be performed by [K.B. Electric]. The Subcontract 

consists of (i) this Subcontract Agreement; (ii) the Prime Contract, 

including the Agreement between [Wal-Mart] and [MacDougall] and all 

other Contract documents identified therein, including all Conditions of the 

contract (general, supplementary and special conditions), Drawings, 

Specifications, Addenda issued prior to execution of the Prime Contract 

between [Wal-Mart] and [MacDougall], and other Contract Documents 

listed in the Prime Contract; (iii) other documents identified in this 

Subcontract Agreement; and (iv) changes or modifications to the 

Subcontract issued after execution of this Agreement.

Appellants’ App. at 306. Paragraph 29 of the Subcontract contains the following 

provision:

29. SUBCONTRACT CONTROLS:

Where any provision of the contract documents between [Wal-Mart] and 

[MacDougall] are found to be inconsistent with any provision of this 

Subcontract, then this Subcontract shall govern. 

Id. at 307.

K.B. Electric was required under the terms of the Subcontract to obtain, at its sole 

expense, and furnish to Wal-Mart and MacDougall, certificates of insurance for CGL 

“with a combined Bodily Injury and Property Damage limit of not less than ONE Million 
5

($1,000,000.00) dollars per occurrence and in the aggregate,” and to name Wal-Mart and 

MacDougall as additional insureds (“AIs”) on a primary non-contributory basis. Id. at 

301. Unlike the Prime Contract, the Subcontract did not include a provision explicitly 

requiring the purchase of umbrella/excess insurance coverage, and did not include a 

prohibition against K.B. Electric’s insurer from excluding coverage for the independent 

negligence of Wal-Mart and MacDougall.

The Subcontract contains two indemnification provisions, which are referred to by 

the parties as Paragraph 4 and Paragraph 21. Those indemnification provisions read as 

follows:

4. INSURANCE:

INSURANCE/HOLD HARMLESS RIDER

. . . .

HOLD HARMLESS:

To the fullest extent permitted by law, [K.B. Electric] expressly agrees to 

defend (at [K.B. Electric’s] expense and with counsel acceptable to 

[MacDougall]), Indemnify, and hold harmless [Wal-Mart], [MacDougall], 

Architect, Architect’s Consultants, Engineer, Construction Manager, 

Lender and any other parties which [MacDougall] has agreed to indemnify 

as named or referenced in the project contract documents as attached to and 

made a part of this Subcontract, their respective Officers, Directors, 

Shareholders, Employees, Agents, Successors, Affiliates and Assigns from 

and against any and all claims, suits, losses, cause of action, damages, 

liabilities, fines, penalties and expenses of any kind whatsoever, including 

without limitation arbitration or court costs and attorney’s fees, arising on 

account of or in connection with injuries to or the death of any person, or 

any and all damages to property including loss of use, from or in any

manner connected with the work performed by or for [K.B. Electric] under 

this Subcontract, caused in whole or in part by the presence of the person or 

property or the negligent acts or omissions of [K.B. Electric] or any of its 

Employees, Agents, Representatives, Sub-Subcontractors, or suppliers or 

anyone for whose acts they may be liable, including without limitation such 

claims, damage, loss or expense caused in part by the negligent acts or 

omissions of a party indemnified hereunder. Such obligation shall not be 

construed to negate, abridge or reduce the rights or obligations of indemnity 
6

which would otherwise exist as to a party or person described in the 

Paragraph. The defense and indemnification obligations under this 

Subcontract agreement shall not be restricted in any way by any limitation 

on the amount or type of damages, compensation, or benefits payable by or 

for [K.B. Electric] under workers’ compensation acts, disability benefits 

acts, or other employees of [K.B. Electric] or of any third party to whom 

[K.B. Electric] may subcontract a part or all of the work. 

. . . .

21. INDEMNITY:

A. [K.B. Electric] shall unconditionally indemnify, hold harmless, protect 

and defend [MacDougall], [Wal-Mart], Architect, and all of their agents, 

and employees from and against all claims, damages, losses, liabilities, and 

expenses, including attorneys’ fees, arising out of or resulting from the 

performance of [K.B. Electric’s] work or of other activities or services of 

any kind undertaken by [K.B. Electric], or any other actions taken on or off 

the premises, provided that any such claim, damages, loss liability, or 

expense, (i) is attributable to bodily injury, sickness, disease, or death of 

any person (including employees of [K.B. Electric], indemnities, and the 

third parties), or patent infringement or to injury to or destruction of 

tangible property and (ii) is caused in whole or in part by any negligent or 

wrongful act or omission of [K.B. Electric] or anyone directly or indirectly 

employed by it or anyone for whose acts it may be liable, or is caused by or 

arises out of the use of any products, material, or equipment furnished by 

[K.B. Electric]. [K.B. Electric] shall bear any expense, whether incurred or 

paid by [MacDougall], [Wal-Mart], or the Architect on account of their 

being charged with such liability for any such death, injury, loss or damage, 

including attorney’s fees and court costs in the defense or preparing for the 

defense against such claims or charges. This paragraph shall apply to the 

claims of [K.B. Electric] and its employees against any other subcontractor 

and to the claims of any other subcontractor or its employees against [K.B. 

Electric]. . . .

Id. at 301-06.

Wethington’s original complaint named Wal-Mart and MacDougall as defendants 

alleging that the two negligently (1) failed to supervise and take safety precautions at the 

Project site to prevent Wethington from suffering electrocution, (2) failed to duly warn 

Wethington of the risk of electrocution because the power was kept on while Wethington 

pulled wire for an electric service box, (3) failed to shut down the power to prevent 
7

Wethington from suffering electrocution, and (4) chose to leave the electricity on while 

Wethington worked in order to save time on completion of the Project. Wethington’s 

amended complaint alleged that Wal-Mart was vicariously liable for MacDougall and 

K.B. Electric’s conduct, and that Wal-Mart assumed a duty of care to Wethington, among 

other allegations. As for MacDougall, the amended complaint alleged that MacDougall 

had contractually assumed a non-delegable duty of care such that it was vicariously liable 

for K.B. Electric’s conduct, among other allegations.

At the time of the accident, MacDougall was the named insured under two policies 

written by Amerisure. The CGL policy included bodily injury/property damage

(“BI/PD”) coverage with limits of $1,000,000 per occurrence. The Umbrella Policy

included limits of $10,000,000 per occurrence. K.B. Electric was the named insured 

under two policies written by West Bend. The Contractors Businessowners Policy 

included CGL BI/PD coverage with limits of $1,000,000 per occurrence. The 

Commercial Umbrella Policy had coverage limits of $6,000,000 per occurrence. 

West Bend tendered a defense to Wal-Mart and MacDougall against Wethington’s 

complaint and amended complaint pursuant to a reservation of rights under its insurance 

policies and demanded that Amerisure participate in the defense of Wal-Mart and 

MacDougall against Wethington’s claims. Because Amerisure declined to participate in 

the defense efforts, MacDougall filed a third-party complaint against K.B. Electric and 

West Bend, and West Bend filed a cross-claim/counterclaim/fourth-party complaint 

against MacDougall, Wethington, Wal-Mart, K.B. Electric, and Amerisure. West Bend 

defended K.B. Electric against MacDougall’s third-party complaint pursuant to a 

reservation of rights under its insurance policies. Ultimately, Wethington settled his 
8

claims against Wal-Mart for $50,000. 

MacDougall, West Bend, and Amerisure filed a stipulation of facts and 

authenticity of documents with the trial court, and motions for summary judgment were 

filed by each. The trial court held oral argument on the parties’ motions and ultimately 

issued two orders granting MacDougall’s and Amerisure’s motions, making the 

following determinations: (1) West Bend had the sole primary duty under West Bend’s 

CGL policy to defend/indemnify Wal-Mart against Wethington’s complaint; (2) West 

Bend had the sole primary duty under West Bend’s CGL policy to defend/indemnify 

MacDougall against Wethington’s complaint; (3) West Bend’s Umbrella Policy provided 

coverage to Wal-Mart and MacDougall against Wethington’s complaint; (4) West Bend’s 

Umbrella Policy was primary to Amerisure’s CGL policy for purposes of Wethington’s 

suit against Wal-Mart and MacDougall; (5) K.B. Electric had a duty under Paragraph 4 to 

defend/indemnify MacDougall against Wethington’s complaint; and (6) West Bend had a 

duty under its CGL and Umbrella policies to defend/indemnify K.B. Electric against 

MacDougall’s third-party complaint for indemnification. West Bend and K.B. Electric 

each filed notices of appeal from the trial court’s orders, and the matters were 

consolidated for purposes of appeal.

DISCUSSION AND DECISION

Summary Judgment Standard of Review

Our standard of review in appeals from summary judgment is well settled and has 

been stated as follows:

On appeal from a grant of summary judgment, our standard of review is the 

same as that of the trial court. We stand in the shoes of the trial court and 

apply a de novo standard of review. Our review of a summary judgment 
9

motion is limited to those materials designated to the trial court. Summary 

judgment is appropriate only where the designated evidence shows there 

are no genuine issues of material fact and the moving party is entitled to 

judgment as a matter of law. For summary judgment purposes, a fact is 

“material” if it bears on the ultimate resolution of relevant issues. We view 

the pleadings and designated materials in the light most favorable to the 

non-moving party. Additionally, all facts and reasonable inferences from 

those facts are construed in favor of the nonmoving party. 

A trial court’s grant of summary judgment is clothed with a presumption of 

validity, and the party who lost in the trial court has the burden of 

demonstrating that the grant of summary judgment was erroneous. Where a 

trial court enters specific findings and conclusions, they offer insight into 

the rationale for the trial court’s judgment and facilitate appellate review, 

but are not binding upon this court. We will affirm upon any theory or 

basis supported by the designated materials. When a trial court grants 

summary judgment, we carefully scrutinize that determination to ensure 

that a party was not improperly prevented from having his or her day in 

court.

In this case, the parties filed cross-motions for summary judgment.

However, the fact that cross-motions for summary judgment were made 

does not alter our standard of review. Instead, the reviewing court must 

consider each motion separately to determine whether the moving party is 

entitled to judgment as a matter of law.

Hammerstone v. Ind. Ins. Co., 986 N.E.2d 841, 845 (Ind. Ct. App. 2013) (internal 

citations and quotations omitted).

In particular, since the parties’ arguments involve contract interpretation, our 

standard of review with respect to contracts has been stated as follows:

In general the construction of a written contract is a question of law for the 

court, making summary judgment particularly appropriate in contract 

disputes. Because the interpretation of a contract presents a question of law 

it is reviewed de novo by this court. When a trial court has entered 

summary judgment in a contract dispute, implicitly it has determined either 

that: 1) the contract is not ambiguous or uncertain as a matter of law and 

the trial court need only apply the terms of the contract; or 2) the contract is 

ambiguous, but the ambiguity may be resolved without the aid of factual 

determinations.

Jenkins v S. Bend Cmty. Sch. Corp., 982 N.E.2d 343, 347 (Ind. Ct. App. 2013) (internal 

citations omitted).
10

More particularly, with respect to insurance contracts the following applies:

The interpretation of an insurance policy presents a question of law that is 

appropriate for summary judgment. If the language in the policy is 

unambiguous then it should be given its plain and ordinary meaning. But, 

if the language is ambiguous, the policy should be strictly construed against 

the insurer. Finally, the terms of a contract are not ambiguous merely 

because controversy exists between the parties concerning the proper 

interpretation of terms.

Wicker v. McIntosh, 938 N.E.2d 25, 28 (Ind. Ct. App. 2010) (internal citations omitted). 

Here, however, we are asked to determine the responsibilities of two insurance 

companies. “When, as here, however, the injured party is not the named insured, the 

policy is construed from a neutral stance.” Barga v. Ind. Farmers Mut. Ins. Grp., Inc., 

687 N.E.2d 575, 578 (Ind. Ct. App. 1997) (citing Ind. Lumbermens Mut. Ins. Co. v. 

Statesman Ins. Co., 260 Ind. 32, 34, 291 N.E.2d 897, 899 (1973)).

Insurance Policy Language

Both West Bend’s and Amerisure’s CGL policies contain the standard ISO CGL 

BI/PD insuring agreement3requiring the insurer to defend an insured against any “suit” 

seeking damages because of “bodily injury” caused by an “occurrence,” and to indemnify 

an insured against “those sums that the insured becomes legally obligated to pay as 

damages because of ‘bodily injury’ . . . to which this insurance applies.” Id. at 432, 570.

“Occurrence” is defined as “an accident, including continuous or repeated exposure to 

substantially the same general harmful conditions.” Id. at 445, 583. 

CGL insurance policies are designed to protect an insured against certain 

losses arising out of business operations. Most CGL policies are written on 

standardized forms developed by an association of domestic property 

insurers known as the Insurance Services Office (“ISO”). Hartford Fire 

 

3 Amerisure’s CGL form provides at the bottom of each page “Copyright ISO Properties, Inc., 

2006.” Appellants’ App. at 432-48. West Bend’s CGL form provides at the bottom of each page 

“Copyright ISO Properties, Inc., 2006.” Id. at 570-85.
11

Ins. Co. v. California, 509 U.S. 764, 772, 113 S. Ct. 2891, 125 L. Ed. 2d 

612 (1993). “[These] policies begin with a broad grant of coverage, which 

is then limited in scope by exclusions. Exceptions to exclusions narrow the 

scope of the exclusion and, as a consequence, add back coverage. 

However, it is the initial broad grant of coverage, not the exception to the 

exclusion, that ultimately creates (or does not create) the coverage sought.” 

David Dekker, Douglas Green & Stephen Palley, The Expansion of 

Insurance Coverage for Defective Construction, 28 Constr. Law, Fall 2008, 

at 19, 20.

Sheehan Constr. Co., Inc. v. Cont’l Cas. Co., 935 N.E.2d 160, 162 (Ind. 2010) (internal 

footnote omitted), opinion adhered to as modified on rehearing by Sheehan Constr. Co., 

Inc. v. Cont’l Cas. Co., 938 N.E.2d 685 (Ind. 2010).

1. Amerisure’s CGL Policy4

The Contractors General Liability Extension Endorsement defines “insured” to 

include “you,” which is defined to include the “Named Insured shown in the 

Declarations,” which is MacDougall. Appellants’ App. at 418, 432, 327 (citations to each 

term respectively). Amerisure’s “other insurance” clause provides as follows:

4. Other Insurance

If other valid and collectible insurance is available to the insured for a loss 

we cover under Coverages A or B of this Coverage Part, our obligations are 

limited as follows:

a. Primary Insurance

This insurance is primary except when Paragraph b. below applies. 

If this insurance is primary, our obligations are not affected unless any of 

the other insurance is also primary. Then, we will share with all that other 

insurance by the method described in Paragraph c. below.

b. Excess Insurance

(1) This insurance is excess over:

. . . . 

 

4 Because the trial court determined that Amerisure’s CGL policy was not implicated, we do not 

set forth the provisions of Amerisure’s Umbrella policy.
12

(b) Any other primary insurance available to 

you covering liability for damages arising out of 

the premises or operations, or the products and 

completed operations, for which you have been 

added as an additional insured by attachment of 

an endorsement.

(2) When this insurance is excess, we will have no duty under 

Coverages A or B to defend the insured against any “suit” if any 

other insurer has a duty to defend the insured against that “suit.” If 

no other insurer defends, we will undertake to do so, but we will be 

entitled to the insured’s rights against all those other insurers.

Id. at 442.

Amerisure’s Contractor’s Blanket Additional Insured Endorsement provides as 

follows:

SECTION II-WHO IS AN INSURED is amended to include as an insured 

any person or organization, called an additional insured in this 

endorsement:

1. Whom you are required to add as an additional insured under a written 

contract or agreement relating to your business; or

2. Who is named as an additional insured under this policy on a certificate 

of insurance. 

However, the written contract, agreement or certificate of insurance must 

require additional insured status for a time period during the term of this 

policy and be executed prior to the “bodily injury” . . . . giving rise to a 

claim under this policy.

. . . .

The insurance provided to the additional insured is limited as follows:

1. That person or organization is only an additional insured with 

respect to liability arising out of:

. . . .

(b) Your ongoing operations performed for that additional 

insured, unless the written contract or agreement or the 

certificate of insurance requires “your work” coverage (or 

working to the same effect) in which case the coverage 

provided shall extend to “your work” for that additional 

insured.
13

. . . .

Any coverage provided in this endorsement is excess over any other valid 

and collectible insurance available to the additional insured whether 

primary, excess, contingent, or on any other basis unless the written 

contract, agreement or certificate requires that this insurance be primary, in 

which case this insurance will be primary without contribution from such 

other insurance available to the additional insured.

Id. at 407-08.

2. West Bend’s CGL Policy

West Bend’s CGL Policy contains an Additional Insured-Contractor’s Blanket 

Endorsement which provides as follows:

A. WHO IS AN INSURED (Section II) is amended to include as an 

additional insured any person or organization whom you are required to add 

as an additional insured on this policy under a written contract or written 

agreement.

The written contract or agreement must be:

1. Currently in effect or becoming effective during the 

term of this policy; and 

2. Executed prior to the “bodily injury,” “property 

damage,” “personal injury and advertising injury.”

B. The insurance provided to the additional insured is limited as follows:

1. That person or organization is only an additional insured 

with respect to liability arising out of:

a. Your premises;

b. “Your work” for that additional insured; or

c. Acts or omissions of the additional insured in 

connection with the general supervision of “your 

work.”

2. The Limits of Insurance applicable to the additional

insured are those specified in the written contract or written 

agreement or in the Declarations of this policy, whichever is 

less. These Limits of Insurance are inclusive and not in 

addition to the Limits of Insurance shown in the Declarations.
14

3. Except when required by written contract or written 

agreement, the coverage provided to the additional insured by 

this endorsement does not apply to:

. . . .

b. “Bodily injury” or “property damage” 

arising out of acts or omissions of the additional 

insured other than in connection with the 

general supervision of “your work.”

C. As respects the coverage provided under this endorsement, Paragraph 

4.b. SECTION IV-COMMERCIAL GENERAL LIABILITY 

CONDITIONS is amended with the addition of the following:

4. Other insurance

b. Excess insurance

This insurance is excess over:

Any other valid and collectible insurance 

available to the additional insured whether 

primary, excess, contingent or on any other 

basis unless a written contract specifically

requires that this insurance be either primary or 

primary and noncontributing. Where required 

by written contract, we will consider any other 

insurance maintained by the additional insured 

for injury or damage covered by this 

endorsement to be excess and noncontributing 

with this insurance.

When this insurance is excess, as a condition of 

coverage, the additional insured shall be 

obligated to tender the defense and indemnity of 

every claim or suit to all other insurers that may 

provide coverage to the additional insured, 

whether on a contingent, excess or primary 

basis.

Id. at 559-60. 

3. West Bend’s Umbrella Policy

West Bend’s Umbrella Policy contains a BI/PD insuring agreement, which in 

pertinent part reads as follows:
15

We will pay on behalf of the insured the “ultimate net loss” in excess of the 

“retained limit” because of “bodily injury” or “property damage” to which 

this insurance applies. We will have the right and duty to defend the 

insured against any “suit” seeking damages for such “bodily injury” or 

“property damage” when the underlying insurance does not provide 

coverage or the limits of “underlying insurance” have been exhausted . . . .

Id. at 628. The Umbrella Policy defines “insured” to include:

3. Any additional insured under any policy of “underlying insurance” will 

automatically be an insured under this insurance. 

If coverage provided to the additional insured is required by a contract or 

agreement, the most we will pay on behalf of the additional insured is the 

amount of insurance required by the contract, less any amounts payable by 

any “underlying insurance.”

Additional insured coverage provided by this insurance will not be broader 

than coverage provided by the “underlying insurance.”

Id. at 637. 

The Umbrella Policy defines “underlying insurance” as “any policies of insurance 

listed in the Declarations under the Schedule of ‘underlying insurance.’” Id. at 644. 

West Bend’s CGL policy is the only CGL policy listed in the schedule of underlying 

insurance. West Bend’s Umbrella Policy contains an “other insurance” clause, which 

reads as follows:

a. This insurance is excess over, and shall not contribute with any of the 

other insurance, whether primary, excess, contingent or on any other basis. 

This condition does not apply to insurance specifically written as excess 

over this Coverage Part.

When this insurance is excess, we will have no duty under Coverages A or 

B to defend the insured against that “suit.” If no other insurer defends, we

will undertake to do so, but we will be entitled to the insured’s rights 

against all those other insurers.

Id. at 639.

4. Both West Bend Policies 

Pertinent to the issue of West Bend’s duty to defend/indemnify its insured, K.B. 
16

Electric, against MacDougall’s third-party complaint for indemnification, West Bend 

contends that its CGL and Umbrella Policies limit application to an “insured” to include, 

in part, “you” the “Named Insured shown in the Declarations,” which is K.B. Electric. 

Id. at 570, 605. Both policies also contain a “contractual liability” exclusion which reads 

as follows:

2. Exclusions

This insurance does not apply to:

. . . .

b. Contractual Liability

“Bodily injury” or “property damage” for which the insured is 

obligated to pay damages by reason of the assumption of liability in 

a contract or agreement. This exclusion does not apply to liability 

for damages: 

(1) That the insured would have in the absence of the contract or 

agreement; or

(2) Assumed in a contract or agreement that is an “insured 

contract”, provided the “bodily injury” or “property damage” occurs 

subsequent to the execution of the contract or agreement. Solely for 

the purposes of liability assumed in an “insured contract,”

reasonable attorney fees and necessary litigation expenses incurred 

by or for a party other than an insured are deemed to be damages 

because of “bodily injury” or “property damage,” provided: 

(a) Liability to such party for, or for the cost of, that party’s defense 

has also been assumed in the same “insured contract”; and

(b) Such attorney fees and litigation expenses are for defense of that 

party against a civil or alternative dispute resolution proceeding in 

which damages to which this insurance applies are alleged.

Id. at 571, 629.

Both West Bend policies include an “employer’s liability” exclusion that provides 

the following:

g. Employer’s Liability
17

“Bodily injury” to:

(1) An “employee” of the insured arising out of and in the course of:

(a) Employment by the insured; or

(b) Performing duties related to the conduct of the insured’s 

business; or

(2) The spouse, child, parent, brother or sister of that “employee” as a 

consequence of Paragraph (1) above.

This exclusion applies whether the insured may be liable as an employer or 

in any other capacity and to any obligation to share damages with or repay 

someone else who must pay damages because of the injury.

This exclusion does not apply to liability assumed by the insured under an 

“insured contract.”

Id. at 571, 630.5

The “insured contract” definitions that appear in West Bend’s policies, read as 

follows:

That part of any other contract or agreement pertaining to your business 

(including an indemnification of a municipality in connection with work 

performed for a municipality) under which you assume the tort liability of 

another party to pay for “bodily injury” or “property damage” to a third 

person or organization. Tort liability means a liability that would be 

imposed by law in the absence of any contract or agreement.

Id. at 582, 641. 

Indemnification

MacDougall argues that the trial court correctly decided the issue of 

indemnification and that the resolution of the issue was not premature. West Bend, on 

the other hand, argues that the trial court’s decision was premature because Wethington’s 

claims against MacDougall had not yet been resolved. Assuming for the sake of 

argument that the duty-to-indemnify issue was ripe, West Bend argues that the trial court 

 

5 West Bend’s Umbrella policy has additional language at the end of the exclusion that is not 

reproduced here.
18

should have allocated Wethington’s claims against MacDougall between the two 

insurers, with Amerisure having the sole duty to provide coverage for MacDougall 

regarding Wethington’s independent negligence claims, other than negligent supervision, 

and West Bend having the primary duty to provide coverage for MacDougall against the

balance of Wethington’s claims. Essentially, West Bend offers its own construction of

the Subcontract’s indemnification provisions, paragraph 4 and paragraph 21, claiming 

that the contract is ambiguous because the provisions cannot be harmonized. 

Assuming that West Bend has standing to challenge the provisions of the Prime 

Contract and the Subcontract, in Weaver v. American Oil Co., 261 N.E.2d 99, 102-03 

(Ind. Ct. App. 1970), modified by Weaver v. American Oil Co., 262 N.E.2d 663 (Ind. Ct. 

App. 1970), superseded by Weaver v. American Oil Co., 257 Ind. 458 (1971), a panel of 

this court explained the distinction between exculpatory clauses and indemnity clauses.

Exculpatory clauses and indemnity clauses are to be distinguished. An 

exculpatory clause covers the risk of harm sustained by the exculpator that 

might be caused by the exculpatee. It acts to deprive the exculpator of his 

right to recover damages for such harm. That is to say, an exculpatory 

clause acts to release the exculpatee from liability for any future acts of 

negligence by the exculpateee [sic] which might result in harm to the 

exculpator.

On the other hand, an indemnity clause covers the risk of harm sustained by 

third persons that might be caused by either the indemnitor or the 

indemnitee and acts to effect a shift of the financial burden for the ultimate 

payment of damages from the indemnitee to the indemnitor. It will be 

observed that the clause in question is both an indemnity and exculpatory 

clause. That is, as to liability to third persons, the clause effects a change in 

the person who ultimately must pay for damage from the indemnitee 

(American Oil) to the indemnitor (Weaver) and his insurer, if any, and is in 

that respect an indemnity clause. However, the clause also deprives the 

lessee Weaver of his right to recover damages for harm suffered due to 

negligent acts of lessor American Oil and in that respect is an exculpatory 

clause. Since the rights here considered are those of the contracting parties 

and not those of a third party, we are concerned only with the exculpatory 
19

aspects of the hold harmless clause, which, if enforceable, deprives Weaver 

of any right to recover for damages suffered because of negligent acts of 

American Oil.

An indemnity clause imposes no unusual burden on an indemnitor because 

of the availability and general use of standard liability insurance policies 

which afford protection from the risk of liability to third persons. Because 

an indemnity clause covers the risk of harm sustained by third persons, if 

the indemnitor carries appropriate liability insurance, damages for the harm 

suffered due to the negligence of either the indemnitor or the indemnitee 

are paid by the indemnitor’s insurance company. Thus, in the indemnity 

situation the availability and general use of insurance renders manageable 

the indemnity risk by treating as a unit the combined risk arising from 

multiple ventures of this type.

The burden assumed under an exculpatory clause, however, is unusual and 

considerable. Liability insurance offers no protection to an exculpator 

because such insurance only affords protection from liability to third 

persons. Because the exculpator has agreed to release the exculpatee from 

liability for any of the exculpatee’s future acts of negligence, the exculpatee 

can negligently cause the exculpator severe injury yet avoid his otherwise 

fixed legal responsibility to compensate the exculpator.

Additionally, we restate the differences between agreements to indemnify and

agreements to insure.

Absent prohibitive legislation, no public policy prevents parties from 

contracting as they desire. Hagerman [Constr. Co. v. Long Elec. Co.], 741 

N.E.2d at 392. For instance, in Indiana, a party may contract to indemnify 

another for the other’s own negligence. Id. However, this may only be 

done if the party knowingly and willingly agrees to such indemnification. 

Id. Such provisions are strictly construed and will not be held to provide 

indemnification unless it is so stated in clear and unequivocal terms. Id. 

We disfavor indemnification clauses because we are mindful that to 

obligate one party for the negligence of another is a harsh burden that a 

party would not lightly accept. Id.

This court has followed a two-step analysis to determine whether a party 

has knowingly and willingly accepted this burden. Id. See also Exide

[Corp. v. Millwright Riggers, Inc.], 727 N.E.2d at 480; Moore Heating & 

Plumbing, Inc. v. Huber, Hunt & Nichols, 583 N.E.2d 142, 146 (Ind. Ct.

App. 1991). First, the indemnification clause must expressly state in clear 

and unequivocal terms that negligence is an area of application where the 

indemnitor (in this case, Starnes) has agreed to indemnify the indemnitee 

(in this case, GKN). See Hagerman, 741 N.E.2d at 392. The second step 

determines to whom the indemnification clause applies. Id. Again, in clear 
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and unequivocal terms, the clause must state that it applies to 

indemnification of the indemnitee by the indemnitor for the indemnitee’s 

own negligence.

GKN Co. v. Starnes Trucking, Inc., 798 N.E.2d 548, 552 (Ind. Ct. App. 2003).

In contrast, an agreement to insure is an agreement to provide both parties 

with the benefits of insurance regardless of the cause of the loss (excepting 

wanton and willful acts). Indiana Erectors, Inc. v. Trustees of Indiana 

University, 686 N.E.2d 878, 880 (Ind. Ct. App. 1997), reh’g denied. An 

agreement to insure differs from an agreement to indemnify in that, with an

agreement to insure, the risk of loss is not intended to be shifted to one of 

the parties, but is instead intended to be shifted to an insurance company. 

Id. Neither party intends to assume a potential liability because both are 

demonstrating appropriate business foresight in avoiding liability by 

allocating it to an insurer. Id. Therefore, standard rules of contract 

interpretation apply to insurance agreements, rather than the strict 

construction given to self-indemnification clauses. See, e.g., Eli Lilly & 

Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind. 1985) (“Generally, in 

Indiana, contracts for insurance are subject to the same rules of 

interpretation as are other contracts.”). Consequently, because we examine 

indemnity provisions and insurance provisions using different levels of 

scrutiny, our determination that the indemnification provisions in the 

contracts at issue are invalid does not also automatically void the insurance 

clauses.

Exide Corp. v. Millwright Riggers, Inc., 727 N.E.2d 473, 482 (Ind. Ct. App. 2000).

Here, West Bend contends that because Paragraph 4 requires K.B. Electric to 

indemnify Wal-Mart and MacDougall for their own acts of negligence, but Paragraph 21 

is silent on the point, the two provisions are in conflict, are ambiguous, and that 

construing the Subcontract against its drafter, MacDougall, Paragraph 21 controls. 

Therefore, K.B. Electric would not be required to indemnify MacDougall for its own 

negligence. Paragraph 21 of the Subcontract would not be an insured contract under 

West Bend’s policy, and thus, West Bend and Amerisure would be required to divide the 

responsibility for providing coverage for Wethington’s claims, with West Bend having 

responsibility for vicarious liability claims only, and Amerisure having responsibility for 
21

acts of independent negligence.

In Dixon v. CertainTeed Corp., 944 F. Supp. 1501 (D. Kan. 1996), the court was 

asked, among other things, to interpret the indemnification provisions of a construction 

contract with respect to the negligence claims of a construction worker who was injured 

at a worksite in the course and scope of his employment. The construction contract 

contained five indemnification clauses, two of which were pertinent to the issues on 

appeal. The contractor claimed that the two indemnification clauses were in conflict 

because one required the contractor to indemnify the owner for the owner’s acts of 

negligence and the other provision was silent on the point. The CertainTeed court found 

the indemnification provisions to be unambiguous. “Ambiguity does not arise from total 

omission. It arises when application of pertinent rules of interpretation to an instrument 

as a whole fails to make certain which one of two or more meanings is conveyed by the 

words employed by the parties.” 944 F .Supp. at 1506 (quoting Wood v. Hatcher, 199 

Kan. 238, 242, 428 P.2d 799, 803 (1967)). The court found that the “meaning conveyed 

by these two unrelated sections of the contract is clear to the court—that the [contractor] 

was to indemnify [the owner] for its own negligence, so long as the loss was not caused 

by the sole negligence of [the owner].” Id. 

The reasoning of the CertainTeed court applies here, and we reject West Bend’s 

argument that the inclusion of language in Paragraph 4 and omission of that language in 

Paragraph 21 creates an ambiguity in the Subcontract such that West Bend is not 

primarily responsible for providing coverage for Wethington’s claims. What is clear 

from the wording of the Subcontract is that K.B. Electric was required to indemnify WalMart and MacDougall, and that West Bend, as K.B. Electric’s insurer, was required to 
22

provide coverage if the loss was a covered loss. 

Furthermore, MacDougall filed its third-party complaint to enforce the 

indemnification provisions under Paragraph 4, not Paragraph 21. The scope of Paragraph 

21 explicitly states, “This paragraph shall apply to the claims of [K.B. Electric] and its 

employees against any other subcontractor and to the claims of any other subcontractor or 

its employees against [K.B. Electric].” Appellants’ App. at 306. Wal-Mart and 

MacDougall are not subcontractors subject to the conditions of that paragraph.

We also disagree with West Bend’s contention that the trial court’s decision on the 

indemnification issue was premature. West Bend argues that since K.B. Electric was not 

required by the express terms of the Subcontract to obtain umbrella insurance coverage, 

Amerisure’s CGL policy should come into play first, citing to Indiana’s adoption of the 

horizontal exhaustion rule. See e.g., Monroe Guar. Ins. Co. v. Langreck, 816 N.E.2d 485, 

493-94 (Ind. Ct. App. 2004) (“pro rata rule . . . applies only with respect to two primary 

insurance policies with competing ‘other insurance’ clauses.”).

In Wal-Mart Stores Inc. v. RLI Ins. Co., 292 F.3d 583 (8th Cir. 2002), the United 

States Court of Appeals for the Eighth Circuit considered the issue of the priority of 

payment where both the supplier and retailer had available primary liability insurance, 

the supplier had excess insurance, and the supply contract between the two contained an 

indemnification provision. While addressing the circular litigation issue recognized by 

Judge Learned Hand in Maryland Casualty Co. v. Employers Mutual Liability Insurance

Co. of Wisconsin, 208 F.2d 731, 733 (2nd Cir. 1953), the Eight Circuit first examined the 

“other insurance” provisions of the primary insurance policies, but then concluded that a 

decision on that basis would lead to circular litigation. Instead, the court held that the 
23

outcome of the dispute was controlled by the indemnification agreement. 292 F.3d at 

587.

In the process of reaching that determination, the court first examined the 

relationships between the parties and the validity of the promise to indemnify. Next, the 

court considered the effect of making a covered insured liable to its insurers for covered 

losses. The third consideration was the inevitable circular litigation that would result if 

the indemnification agreements were not factored into the resolution of the insuranceallocation issues. “A leading commentator summarizes this situation by observing that 

‘an indemnity agreement between the insureds or a contract with an indemnification 

clause . . . may shift an entire loss to a particular insurer notwithstanding the existence of 

an ‘other insurance’ clause in its policy.” Id. at 588 (quoting Couch on Insurance, 

§219:1, at 2:19-7 (3d ed. 1999)). 

The court noted case law observing that the contract between the insureds required 

the insurance arrangements at issue, and stated, “[I]n a suit between two insurers with 

identical and dueling ‘other insurance’ clauses, the indemnity agreement was held to be 

paramount.” Id. at 590. “To hold otherwise would render the indemnity contract 

between the insureds completely ineffectual and would obviously not be a correct result, 

for it is the parties’ rights and liabilities to each other which determine the insurance 

coverage; the insurance coverage does not define the parties’ rights and liabilities one to 

the another [sic].” Id. (Chubb Ins. Co. of Canada v. Mid-Continent Cas. Co., 982 F. 

Supp. 435, 438 (S.D. Miss. 1997)). “Whether the parties are termed ‘primary’ or ‘excess’ 

depends on who is required to pay first, and that is the question presented here. The 

answer to this question, however, depends on the indemnity agreement because of its 
24

effect on the obligations of the parties.” Id. “However, because the liability of an insurer 

is a question of contract stemming from its contractual obligation to cover its insured’s 

liabilities, the logical first step is to determine the respective obligations of the insureds in 

this case under the settlement. Once that is determined, we must decide how much of the 

settlement amount to allocate to each party[] . . . . Only after completing these initial 

steps do we determine the insurers’ respective obligations to cover the settlement 

liability.” St. Paul Fire and Marine Ins. Co. v. Am. Intern. Specialty Lines Ins. Co., 365 

F.3d 263 (4th Cir. 2004). 

Here, the trial court correctly chose to consider the parties’ rights and liabilities to 

each other, which then lead to a determination on the coverage issue. West Bend’s CGL 

policy should be utilized to provide coverage first. West Bend concedes that if Paragraph 

4 controls, then it must provide the required coverage, because the Subcontract would be 

an insured contract under West Bend’s policy. West Bend attempts to avoid payment of 

Wethington’s claims by way of the Umbrella Policy by arguing that the Subcontract did 

not explicitly require K.B. Electric to obtain umbrella coverage.

West Bend argues that the trial court erred when it held that West Bend had a duty 

to defend and indemnify Wal-Mart and MacDougall against Wethington’s claims 

pursuant to West Bend’s Umbrella Policy. AI coverage under West Bend’s Umbrella 

Policy is available only if it is required by a contract or an agreement. Because the 

Subcontract did not require K.B. Electric to purchase an Umbrella Policy or name 

MacDougall as an AI in the Umbrella Policy, K.B. Electric’s contractual obligation to 

purchase insurance was fulfilled by purchasing the CGL policy.

West Bend also claims that the Subcontract’s “flow-down” clause only applies to 
25

the scope, quality, character and manner of work to be performed by K.B. Electric, and 

not to the insurance coverage obligations. West Bend asserts that since the Subcontract 

required $1,000,000 in liability insurance, and West Bend’s Umbrella Policy reduces the 

maximum amount that it will be liable for on behalf of an AI by the amount of the 

underlying insurance, the result would leave $0 payable under West Bend’s Umbrella 

Policy. West Bend contends that the trial court should have held that West Bend had no 

duty to defend/indemnify Wal-Mart and MacDougall under the Umbrella Policy. We 

disagree.

K.B. Electric was required to and did obtain umbrella coverage through West 

Bend. Even though the Subcontract does not explicitly state that K.B. Electric must 

obtain umbrella coverage, the concept of “flow-down” required K.B. Electric to 

undertake and assume toward MacDougall all of the obligations and responsibilities 

MacDougall undertook with respect to Wal-Mart and the Architect. This is so because 

the Subcontract expressly states that it consists not only of the Subcontract itself, but the 

Prime Contract and the general, supplementary, and special conditions thereof. 

In further support of that conclusion, K.B. Electric’s conduct reflects that it 

understood that the concept of “flow-down” applied not only to the scope of work, but 

also to its insurance obligations. The Prime Contract required MacDougall to obtain 

$5,000,000 in umbrella coverage. Although not explicitly required to do so by the terms 

of the Subcontract, K.B. Electric obtained from West Bend $6,000,000 in umbrella 

coverage. The umbrella coverage permitted West Bend to subtract the amount of any 

underlying insurance from the umbrella coverage limits. K.B. Electric’s CGL policy had 

$1,000,000 limits. Thus, K.B. Electric had $5,000,000 in available umbrella policy 
26

coverage, which was consistent with MacDougall’s obligations under the Prime Contract. 

We conclude that the trial court correctly granted summary judgment in favor of 

Amerisure and MacDougall. The parties’ rights and liabilities to each other were 

outlined contractually by the terms of indemnification. Once that determination was 

made, then the insurance coverage issues could be resolved. Thus, the trial court’s 

decision on indemnification was not premature, but in fact, necessary to prevent the 

hazards of circular litigation. The Subcontract explicitly referred to the Prime Contract 

and other documents, incorporating their terms into the Subcontract. That K.B. Electric 

obtained umbrella coverage from West Bend further evinces the understanding that K.B. 

Electric was required to do just that. Therefore, the trial court’s judgment was correct in 

all respects. 

Affirmed. 

FRIEDLANDER, J., and BAILEY, J., concur.