5th Circuit Decision: Good Reminder to Check Your Service Agreements & Insurance Policies

Last week the U.S. 5th Circuit Court of Appeals released its opinion in International Offshore Services v. Linear Controls Operating Inc. In that case, Apache chartered a boat where a subcontractor's employee was injured. Apache sought insurance coverage under a policy issued to the subcontractor, which named Apache as an additional insured. The Court held that although the Marcel exception in the MTCA (requiring the subcontractor to procure insurance if the contractor paid the premium) was valid under the Oilfield Anti-Indemnity Act, Apache's potential liability was not covered by the policy. Apache was listed as an additional insured, not a named insured; therefore, the contractual indemnity was excluded under the Policy's "contractual liability" exclusion. This case is a good reminder to check all of your service agreements and insurance policies (both your own and any other policy you expect to provide coverage) to ensure the risk is allocated as expected amongst the parties.