In re Horizon, 2015 Tex. LEXIS 141 (Tex. 2015)

This case illustrates the need to pay particular attention to the additional-insured provisions of the applicable drilling contract. In this case, BP claimed to be an additional insured under Transocean=s primary and excess insurance policies which provided broader coverage than Transocean assumed under their drilling contract. The Court held that BP=s status as an Aadditional insured@ was limited to the liabilities Transocean assumed in the drilling contract not the broader coverage afforded under Transocean’s insurance policy.

The drilling contract contained what the Court determined to be a standard Aknock-for-knock@ allocation of risk in which Transocean assumed risk for above-surface pollution regardless of fault and BP assumed all other risks. The district court granted Transocean summary judgment, but the 5^th Circuit initially reversed, then, on rehearing, referred the issue to the Texas Supreme Court. Both parties agreed that coverage, if it existed, would depend on the language of the insurance policies.

While the Court recognized that an insured may purchase more coverage than their contract requires, and that such coverage would apply -- the limitation in the policy that coverage would exist only to the extent the contract required would prevail.