An Arkansas appeals court has ruled that an insurer owes nothing to a contractor who was never added to its subcontractor's policy.
The Arkansas Court of Appeals, in a decision delivered on March 11, 2026, affirmed summary judgment in favor of Auto-Owners Insurance Company in a coverage dispute that traces back to a residential remodel gone wrong in Little Rock. The case turns on a question insurance professionals encounter regularly: what happens when a general contractor assumes it has coverage under a subcontractor's policy, but was never actually listed as an additional insured?
The story begins in 2010, when Chuck Hamilton Construction, a general residential building contractor, was hired by homeowners Kristen and Cliff Lee to remodel their house. Chuck Hamilton later brought on Freddie Cobbs, doing business as Cobbs Stonework, to handle stonework and masonry. Cobbs carried a commercial general-liability policy with Auto-Owners. Chuck Hamilton had its own separate CGL policy with Union Insurance Company.
The remodel wrapped up in 2012, but by 2017, the Lees were back with a lawsuit against Chuck Hamilton. They alleged that rock veneer on the home was trapping moisture and causing mold, that mortar in the rock driveway was popping out and the edges were breaking apart, that the rock patio around the pool had similar issues with voids under the pavers indicating poor adherence, and that poor installation of pool house roof decking and placement of insulation was causing the vaulted ceiling wood veneer to sweat and warp. Their claims were rooted in breach of contract and warranty, not negligence or any other tort.
Chuck Hamilton and Union turned to Cobbs and Auto-Owners, demanding they step in to defend and cover the claims. Their reasoning was straightforward: Cobbs did the stonework, Cobbs caused the damage, and Auto-Owners insured Cobbs. But neither Cobbs nor Auto-Owners participated in the proceedings with the Lees, and Chuck Hamilton and Union ultimately settled with the homeowners for $750,000 in December 2019.
That settlement set the stage for the real fight. In March 2020, Union and Chuck Hamilton sued both Cobbs and Auto-Owners. They claimed Chuck Hamilton was an additional insured under Cobbs's Auto-Owners policy and that the insurer had breached its duty to defend and indemnify. They also raised claims of implied indemnity, statutory contribution, and equitable contribution.
Their case leaned partly on a certificate of liability insurance that Cobbs had provided to Chuck Hamilton, listing Auto-Owners as insurer, Cobbs as the insured, and Chuck Hamilton as the certificate holder. The problem, as insurance professionals will immediately recognize, is that the certificate stated plainly that it was issued as a matter of information only and conferred no rights on the certificate holder. Union and Chuck Hamilton ultimately did not rely on this certificate on appeal.
Auto-Owners countered that Chuck Hamilton was never added to Cobbs's policy. The policy itself listed the insured as Freddie Cobbs doing business as Cobbs Stonework, and no one else. Auto-Owners also argued that even if coverage somehow applied, the Lees' claims were contract-based, not tort-based, and that the three-year statute of limitations for tort claims had lapsed before the Lees even filed their complaint. It further argued that its policy limitations concerning mold and a "your work" exclusion would bar coverage regardless.
The circuit court sided with Auto-Owners, finding that Chuck Hamilton was not an insured on the policy and was not in privity of contract with the insurer. It granted summary judgment in favor of Auto-Owners and dismissed the claims with prejudice. A separate default judgment of $1,228,578.54 was entered against Cobbs, who never appeared in the case.
On appeal, the court systematically rejected each of Union and Chuck Hamilton's arguments. On the duty to defend and indemnify, the court found the argument meritless, noting it was undisputed that Chuck Hamilton was not an insured on the Auto-Owners policy. The cases Union and Chuck Hamilton cited about an insurer's obligations to its insured simply did not apply here because that relationship never existed.
The implied indemnity argument fared no better. The court noted that this doctrine applies in cases involving vicarious liability or products liability. Neither situation was present. Auto-Owners was not Chuck Hamilton's agent, and the Lees' claims were grounded in contract, not tort.
The statutory contribution claim under Arkansas Code Annotated section 16-61-202 also failed. That statute governs contributions among joint tortfeasors, and it was undisputed that Auto-Owners was not a joint tortfeasor with Chuck Hamilton. The court also dismissed the argument that Auto-Owners had waived its right to assert coverage defenses by sitting out the Lees' proceedings, again because Chuck Hamilton was not an insured under the policy.
The case is a pointed reminder of a gap that continues to catch contractors and their insurers off guard. A certificate of liability insurance, no matter how reassuring it may look, does not create coverage. If a general contractor needs to be covered under a subcontractor's policy, the subcontractor must actually request an additional-insured endorsement from their insurer, and the insurer must actually add it. Anything short of that leaves the general contractor exposed, as Chuck Hamilton and Union learned at a cost that ultimately exceeded $1.2 million.
