The U.S. Court of Appeals for the Seventh Circuit issued a decision Tuesday in a complex insurance coverage dispute arising from a 2018 gas line explosion in Homerville, Georgia, that severely injured three women.
The case, *Atlanta Gas Light Company v. Navigators Insurance Company*, involves Atlanta Gas Light Company and Southern Company Gas, collectively known as AGL, which had hired United States Infrastructure Corporation to locate and mark gas lines throughout Georgia. USIC failed to mark a gas line in Homerville, and in 2018, a boring company struck the unmarked pipeline, causing an explosion that severely injured three women.
Following the explosion, the victims threatened legal action against multiple parties. In 2019, the victims, AGL, and USIC participated in presuit mediation to resolve the dispute. During this process, the victims reached a settlement agreement with USIC but were unable to reach terms with AGL. The victims subsequently filed suit against AGL in Georgia state court, referred to in the opinion as the "Underlying Suits." AGL eventually settled with the victims after being sued.
The insurance dispute arose from AGL's service agreement with USIC, which required USIC to obtain both primary and excess liability insurance coverage that included AGL as an additional insured party. When USIC's settlement with the explosion victims exhausted its primary insurance policy, AGL tendered the defense and indemnification of the Georgia lawsuits to USIC's excess insurer, Navigators Insurance Company.
Navigators denied AGL's requests for coverage, arguing that AGL was not an "additional insured" under the excess policy. The insurer's position was that the underlying lawsuits were based solely on AGL's conduct, not USIC's actions, which would preclude coverage under the policy terms.
Based on Navigators's refusal to defend AGL during the mediation process and its rejection of AGL's coverage requests, AGL filed suit against the excess insurer. The gas companies alleged breach of contract, breach of fiduciary duty, and breach of the duty to defend.
The case was initially filed in the U.S. District Court for the Southern District of Indiana, Indianapolis Division, where Judge James P. Hanlon presided. The matter was appealed to the Seventh Circuit under case numbers 24-2888 and 24-2889.
Oral arguments were held before the three-judge panel on Sept. 5, 2025, with the court issuing its decision on Jan. 22, 2026. The panel consisted of Circuit Judges Diane S. St. Eve, Candace Jackson-Akiwumi, and John Z. Lee, with Judge Lee writing the court's opinion.
The case highlights the complex relationships between contractors, subcontractors, and their respective insurance providers in infrastructure projects. When utility companies hire contractors to perform critical safety services like gas line location and marking, the insurance arrangements must clearly define coverage responsibilities, particularly when accidents occur.
The dispute also underscores the importance of proper gas line marking procedures. Utility companies across the country rely on specialized contractors to locate and mark underground infrastructure before excavation work begins. When these contractors fail to properly identify gas lines, the consequences can be catastrophic, as demonstrated by the serious injuries suffered by the three women in this case.
Insurance coverage disputes in construction and utility contexts often turn on the specific language of policies and whether injured parties' claims arise from the conduct of additional insured parties versus the primary contractors. Courts must carefully analyze the factual basis for underlying claims to determine whether coverage applies.
The Seventh Circuit's decision in this case will likely influence how courts interpret additional insured provisions in excess liability policies, particularly in cases where multiple parties may bear responsibility for accidents. The ruling may also affect how contractors and utility companies structure their insurance arrangements to ensure adequate coverage for potential liabilities.
For utility companies operating pipeline infrastructure, the case serves as a reminder of the critical importance of comprehensive insurance coverage and clear contractual arrangements with contractors who perform safety-critical services. The substantial costs associated with serious accidents, including medical expenses, settlement payments, and legal fees, underscore the need for robust risk management strategies.
The decision represents the latest development in ongoing legal battles over insurance coverage responsibilities in infrastructure projects, where multiple parties often share potential liability for accidents and injuries.