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Coverage for Kotecki Waivers: Finally an Answer

IDC Quarterly Vol. 17, No. 2 (17.2.34)

Summary:  As discussed in Complexities in Construction Negligence Litigation, inter alia, in Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155 (1991), the Illinois Supreme Court “capped” an employer’s contribution liability based upon its statutory exposure for compensation benefits. However, the court subsequently recognized that the so-called “Kotecki limitation” was “waived” where the employing contractor agreed to indemnify the upstream contractor or owner who is seeking contribution. Braye v. Archer-Daniels-Midland Co., 175 Ill. 2d 201 (1997) and Liccardi v. Stolt Terminals, Inc., 178 Ill. 2d 540 (1997). Following Liccardi, a coverage question arose as to whether the waived Kotecki excess fell within “insured contract” coverage under the employing contractor’s CGL policy or was covered by its employer’s liability policy. In Virginia Surety Co., Inc. v. Northern Ins. Co. of New York, 224 Ill. 2d 550 (2007), the Illinois Supreme Court determined that coverage, if any, lies under the employer’s liability policy.