Insureds trying to get one policy to cover multiple entities

I am in construction defect and construction GL.

Recently I have noticed insured contractors trying to cut corners by saying that one policy should cover all entities. Has anyone else in the commercial lines noticed insureds trying to do this?

For example:
John Smith owns two separate entities, abc hvac inc. and abc plumbing inc.
They both have separate license numbers and separate corps entities with the Secretary of State.
But since it’s the same owner he decided to cut one insurance for abc plumbing thinking that since he owns both businesses the insurance policy for abc hvac should also cover abc plumbing. He also doesn’t tell the agent about this.

Abc plumbing gets sued and they try to claim it on abc hvac.

I deny the claim as this is not an insured on the policy.

The plaintiff attorney gets smart and then also names abc HVAC on the lawsuit and now I have a duty to defend.

I some how end up defending John smith and both entities because the payments are intermingled between both entities. John smith used workers for both entities for jobs for each project and payments went into either account to keep each business afloat.