Mid-Century Insurance is battling in court to avoid covering Costco in a major injury lawsuit, spotlighting the limits of additional insured coverage.
Mid-Century Insurance Company is seeking a declaratory judgment in the United States District Court for the District of Utah, aiming to clarify its obligations to Costco Wholesale Corporation in a lawsuit stemming from a serious parking lot accident. The complaint, filed on September 17, 2025, comes after a December 2021 incident at the Murray, Utah Costco, where Heather J. Van Boerum was struck by a vehicle while walking from her car to the store entrance. The accident resulted in severe injuries, including below-the-knee amputations, broken bones, a pelvis fracture, and a concussion.
Following the incident, Heather Van Boerum and her husband, Don H. Van Boerum, filed a lawsuit in Utah state court against Costco and the driver, Steven L. Gustavson. Their claims focused on negligence, premises liability, and loss of consortium, specifically alleging that Costco’s parking lot design was defective. The complaint pointed to the absence of sidewalks or designated pedestrian pathways as a contributing factor to the accident. Importantly, Wasatch Lawns & Landscape, L.L.C. – the company responsible for snow removal at the site – was not named as a defendant in the lawsuit. The complaint did not allege any failure in snow or ice removal, nor did it mention Wasatch’s actions or omissions.
Wasatch had a vendor agreement with Costco to provide snow removal services at the Murray location. As part of this agreement, Wasatch agreed to indemnify Costco for liabilities arising from its services and to add Costco as an additional insured on its liability policy with Mid-Century Insurance Company. The policy, effective from March 18, 2021, to March 18, 2022, provided coverage limits of $1 million per occurrence and $2 million in the aggregate. Costco was added as an additional insured through an endorsement, but only for liability caused by Wasatch’s acts or omissions in the performance of its operations for Costco.
After Costco requested that Wasatch and Mid-Century defend and indemnify it in the Van Boerum lawsuit, Mid-Century reviewed the policy and the allegations. The insurer determined that the claims against Costco were based solely on alleged parking lot design defects and did not involve any act or omission by Wasatch or any issue related to snow or ice removal. As a result, Mid-Century denied coverage, stating that the policy did not apply to the claims in the underlying lawsuit and that it had no duty to defend or indemnify Costco or Wasatch.
The insurance policy included several relevant clauses. The Businessowners Liability Coverage Form (BP 00 06 01 97) provided coverage for bodily injury, property damage, or personal and advertising injury caused by an occurrence within the coverage territory during the policy period. The policy defined “occurrence” as an accident resulting in bodily injury or property damage that was neither expected nor intended by the insured. The policy also contained exclusions for multiple or enhanced damages (such as double or treble damages) and for taxes, fines, or penalties. Under Utah’s “eight corners” rule, the duty to defend is determined solely by the allegations in the complaint and the terms of the policy.
In its complaint, Mid-Century seeks a declaratory judgment that there is no coverage under the policy for the claims asserted by the Van Boerums against Costco, that it is not required to indemnify Costco or Wasatch, and that it has no duty to defend either party in the underlying lawsuit. The insurer emphasizes that the policy’s additional insured endorsement applies only to liability caused by Wasatch’s operations, which are not at issue in the Van Boerum complaint.
As of now, the case remains pending in federal court, and no final decision has been issued. The outcome will be closely watched by insurance professionals, brokers, and risk managers, as it highlights the importance of precise policy language and the boundaries of additional insured coverage in commercial liability insurance. The dispute underscores how the specifics of a complaint and the wording of an insurance policy can determine the extent of an insurer’s obligations in complex, multi-party claims.
