What happened: Arch Insurance alleges two carriers refused to settle an injury claim on behalf of a contractor they were obligated to cover
Who's involved: Arch Insurance, The Burlington Insurance Company, Navigators Specialty Insurance Company, Quality Traffic Control Inc., Herzog Contracting Corp.
What's at stake: Settlement costs, attorneys' fees, and potential vexatious-refusal damages under Missouri law
Why it matters: The case tests whether a primary insurer can exhaust its limits for one insured while ignoring settlement obligations to another
Where it stands: Complaint filed September 28, 2026, in the US District Court for the Western District of Missouri
Burlington Insurance acknowledged a general contractor was an insured under its policy, appointed defense counsel on its behalf - and then, when an injured motorist's settlement demand landed, allegedly refused to even consider responding.
That is the central claim in a complaint filed by Arch Insurance Company on September 28, 2026, in the US District Court for the Western District of Missouri. The case pits an excess carrier against two insurers that were supposed to sit below it in the coverage stack, along with a subcontractor whose contract triggered the whole arrangement. The question at its core is one claims professionals will recognise: when one policy covers both a named insured and an additional insured, whose interests take priority when a settlement deadline is ticking?
The dispute traces back to a Missouri highway construction project on I-29 in Andrew and Buchanan Counties. Herzog Contracting Corp., the general contractor, subcontracted traffic-control work to Quality Traffic Control Inc. under a September 2022 agreement. That subcontract required QTC to add Herzog as an additional insured on QTC's commercial general liability policy and to endorse that policy so coverage for Herzog would be primary - meaning QTC's insurers would pay first, ahead of Herzog's own carrier, the complaint states.
QTC carried a $1 million CGL policy through Burlington and a $5 million excess policy through Navigators Specialty Insurance Company. Herzog, separately, held a $2 million CGL policy through Arch.
On March 4, 2023, a motorist was injured in a collision while stopped in traffic on I-29 near the construction zone. He sued Herzog and the Missouri Highways and Transportation Commission in July 2024, later adding QTC. The amended petition alleged QTC failed to provide adequate warning signs, traffic-control devices, and speed reductions leading into the work zone, according to the complaint.
Burlington initially did the right thing, the complaint suggests. On October 25, 2024, Burlington acknowledged Herzog's status as an additional insured and retained defense counsel for the contractor.
Then came the settlement demand. On August 29, 2025, the injured motorist sent a time-limited demand to Herzog, originally set to expire on November 27, 2025.
Burlington's response, according to the filing, was blunt. In a September 3, 2025 letter, Burlington told Herzog it was "providing a defense ONLY" and "will NOT be responding to this demand on behalf of Herzog." Burlington added that it "cannot be held responsible for payment of any amount in the settlement of any claim or satisfaction of any judgment," the complaint states.
What followed was months of back-and-forth. Arch demanded Burlington reverse course. Herzog wrote separately, urging Burlington to protect it. Burlington's alleged reply on November 21, 2025: it would be "tendering its full policy limit to plaintiff on behalf of its named insured" - QTC - and that "any duty to defend or indemnify Herzog" would then be "extinguished."
Put plainly, the complaint alleges Burlington planned to spend its entire $1 million limit settling the motorist's claims against QTC while leaving Herzog - Burlington's own additional insured - with nothing.
Navigators, the excess-layer insurer sitting above Burlington, was no more responsive, according to the complaint. On December 5, 2025 - the same day Burlington reiterated its denial - Navigators told Herzog it had "no current duty to defend or indemnify Herzog as an additional insured" because it had not received "documentation substantiating such exhaustion" of the Burlington policy.
That left Arch exposed. With both lower-layer carriers refusing to act and the settlement deadline bearing down, Arch says it was forced to settle the motorist's claims against Herzog itself - even though Arch's policy was supposed to kick in only after Burlington's and Navigators' coverage was used up, the complaint alleges.
QTC, the subcontractor whose contract had triggered all of these insurance obligations, allegedly refused to acknowledge or accept Herzog's demand for defense and indemnity at any point after September 26, 2024, according to the filing.
Arch brings seven counts: breach of contract and bad faith against both Burlington and Navigators, a vexatious-refusal-to-pay claim against each carrier under Missouri law, and breach of contract against QTC for failing to honour its indemnity and insurance obligations under the subcontract.
The vexatious-refusal claims carry extra weight. Missouri's statute allows an insured to recover damages, interest, and attorneys' fees when a carrier denies a covered claim without reasonable cause - a provision that could push the total recovery well beyond the original settlement amount.
For claims teams managing construction programs with layered coverage and additional-insured requirements, the case is a sharp reminder: the endorsements and primary-coverage commitments written into subcontracts only protect the additional insured if the carrier behind them is willing to act when a settlement demand arrives with a deadline attached.
The allegations in the complaint have not been tested in court, and no judge has ruled on the merits.
