New York Insurance Coverage Law Update

Court Holds Additional Insured Not Entitled To Indemnification Without Proof Named Insured Was A Proximate Cause Of Injury

A subcontractor’s employee sued the construction manager for a Manhattan project for injuries the subcontractor’s employee allegedly sustained while working on the project. The construction manager sought a defense and indemnity as an additional insured under the subcontractor’s commercial general liability insurance policy. The insurer disclaimed coverage on the ground that there was no evidence that the employee’s alleged injuries were “caused, in whole or in part” by the subcontractor or others acting on its behalf, as required by its policy. The action brought by the subcontractor’s employee settled and the construction manager sued the insurer, which argued that it had no duty to indemnify the construction manager for the settlement payment it made to the employee. The trial court ruled that the insurer had to indemnify the construction manager.  After the New York Court of Appeals decided Burlington Ins. Co. v. New York City Transit Authority, 29 N.Y.3d 313 (2017), holding that “where an insurance policy is restricted to liability for any bodily injury ‘caused, in whole or in part,’ by the ‘acts or omissions’ of the named insured, the coverage applies to injury proximately caused by the named insured,” the insurer asked the court to reconsider its ruling. The court did so, and it vacated its earlier ruling that the insurer had to indemnify the construction manager. The court explained that it had not been decided whether the subcontractor’s acts or omissions were a proximate cause of its employee’s injuries. The court opined that the subcontractor’s acts or omissions were not necessarily a proximate cause of its employee’s injuries simply because the employee worked for the subcontractor. [Tishman Const. Corp. of N.Y. v. Scottsdale Ins. Co., 2018 N.Y. Slip Op. 30991(U) (Sup.Ct. N.Y. Co. May 17, 2018).]

Owner Of Three-Family Property Loses Bid For Coverage Under Policy Defining Insured Location As Two-Family Dwelling

Claimant was allegedly injured when she fell in front of a home in Staten Island, and she sued the owner.  The owner’s insurer disclaimed coverage, and the court granted the insurer’s motion for summary judgment. The court explained that the policy excluded coverage for bodily injury arising out of premises that are not an “insured location,” defined as the “residence premises,” which the policy went on to define as a two-family dwelling where the owner resided in at least one of the family units.  The court held that the home was a three-family dwelling rather than a two-family dwelling and, therefore, there was no coverage under the policy. [Tower Ins. Co. of New York v. Cummings, 2018 N.Y. Slip Op. 30838(U) (Sup.Ct. N.Y. Co. May 3, 2018).]

Appellate Division Finds Owner Not Entitled To Additional Insured Coverage Under Tenant’s Policy For Claim That Did Not Arise Out Of Leased Property

A student sued the owner of a school he attended, alleging that he was injured when he fell while walking down an exterior staircase at the building. The student obtained a default judgment against the owner. The owner was an additional insured under a tenant’s insurance policy, and the student sued that insurer to recover the amount of the judgment. The Supreme Court, Kings County, granted summary judgment in favor of the student, and the insurer appealed. The Appellate Division, Second Department, reversed, explaining that the additional insured provision in the tenant’s insurance policy provided coverage to the owner as an additional insured “only with respect to liability arising out of the ownership, maintenance or use” of the property leased to the tenant. The Second Department then observed that the tenant did not lease the staircase the student was descending when he allegedly fell, and the student was not the tenant’s invitee at the time of the accident. The court concluded that the student’s alleged injury was not a bargained-for risk and that the insurer was entitled to summary judgment. [Lissauer v. GuideOne Specialty Mut. Ins., 2018 N.Y. Slip Op. 03522 (2d Dep’t May 16, 2018).]

Foreign Risk Retention Group Does Not Have To Comply With New York Insurance Law § 3420(d)(2)

A worker allegedly injured while working at a construction project in Brooklyn sued the general contractor, which sought additional insured coverage under an insurance policy issued to a subcontractor by a risk retention group (“RRG”) organized under Montana law. The RRG disclaimed coverage but the general contractor contended that the disclaimer was untimely under New York Insurance Law § 3420(d)(2). The Supreme Court, New York County, ruled in favor of the RRG and the general contractor appealed. The Appellate Division, First Department,  held that a foreign RRG does not have to comply with § 3420(d)(2) because it is preempted by the federal Liability Risk Retention Act of 1986. [Nadkos, Inc. v. Preferred Contractors Ins. Co. Risk Retention Group LLC, 2018 N.Y. Slip Op. 03242 (1st Dep’t May 3, 2018).]