A federal appeals court has overturned a lower court ruling and held a Nationwide Mutual Insurance Co. unit is obligated to provide coverage in connection with a trade show attendee’s injury from an electric boom lift as an additional insurer, not as an excess insurer.

A window-washing company contracted with Stamford, Connecticut-based United Rentals (North America) Inc. in June 2007 to rent an electric boom lift, which was used in a trade show in Rhode Island, according to Friday’s ruling by the 1st U.S. Circuit Court of Appeals in Boston in Scottsdale Insurance Co. v. United Rentals (North America) Inc.

Four days later, while it was being operated by a window-washing company employee, the lift struck and injured a trade show attendee. 

The attendee and his wife sued United Rentals, the window-washing company and others in connection with the accident, contending, in part, that the lift’s alarm had failed to warn the attendee he was about to be “run over” by the lift, according to the ruling.

The window-washing company was insured by Nationwide unit Scottsdale Insurance Co., which was required to add as an additional insured any party with which it entered into a contract. United Rentals was insured by ACE American Insurance Co., the ruling said.

This led to coverage litigation, and a ruling by the U.S. District Court in Boston that United Rentals was entitled to defense costs from Scottsdale as an additional insured under the Scottsdale policy.

After the underlying litigation was settled, the court also ruled Scottsdale must provide additional insured coverage to United Rentals, but that this coverage was excess above United Rentals’ own coverage under the ACE commercial general liability policy.

A three-judge appeals court panel ruled Scottsdale was obligated to provide coverage, but as an additional insurer, not an excess insurer. The ACE CGL policy “can be properly termed a ‘fronting’ arrangement with a $2M limit and a $2M deductible,” because the first $2 million of any loss must be paid by United Rentals, and once it has done so, the $2 million policy limit “is considered exhausted,” the ruling said.

“Because United Rentals has no ‘other valid and collectible insurance,’ the Scottsdale Policy affords coverage to United Rentals here,” the ruling said, in vacating the lower court’s judgment and remanding the case for further proceedings.

United Rentals’ attorney David E. Schroeder, counsel with Tribler Orpett & Meyer PC in Chicago, said in a statement, “Obviously, I think it was a great result.

“It is also an important decision on the question of whether fronting policies are ‘other valid and collectible insurance’ for ‘other insurance’ analysis purposes. The court added itself to the majority of courts that have held they are not.”

Scottsdale’s attorneys did not respond to a request for comment.