Texas Supreme Court Issues Long Awaited Opinion On Additional Insured Coverage

On February 13, 2015, the Texas Supreme Court, in response to certified questions from the Fifth Circuit, held that BP was only entitled to limited coverage for Macondo related claims as an Additional Insured under Transocean's insurance policies. Specifically, the court held the Transocean insurance contracts included the language required to necessitate "consulting the drilling contract" to determine BP's status as an additional insured. The court then found that, under the drilling contract, BP's status as an additional insured was inextricably intertwined with the limitations on the extent of coverage to be provided by the Transocean policies. Further, the court found that the only reasonable interpretation of the drilling contract's additional insured provision is that BP's status as an additional insured is limited to liabilities assumed by Transocean in the drilling contract. As such, the court held BP is not entitled to coverage under Transocean's policies for