July 2026 New York Insurance Coverage Update

Fourth Department Finds Professional Services Exclusion Does Not Preclude One Insurer’s Duty To Defend And A Question Of Fact As To Another Insurer’s Duty To Defend Due To An Ambiguous Trade Contract

Erie County owns a park and retained Destro & Brothers Concrete Company as a contractor and LiRo Engineers, Inc. as a construction manager in connection with a paving project. A cyclist was injured when she fell off her bicycle while riding on pavement at the park and filed a bodily injury action against the County, Destro, and LiRo. The County sought additional insured coverage for the action from Selective Insurance Company of America (Destro’s insurer) and Zurich American Insurance Company (LiRo’s insurer). After Selective and Zurich denied coverage, the County filed an action for declaratory judgment and breach of contract. The parties moved for summary judgment and the Supreme Court, Erie County, granted the County’s motion declaring that Selective and Zurich each has a duty to defend the County in the bodily injury action and to reimburse past defense costs. On appeal, Zurich did not dispute that the County qualifies as an additional insured under its policy. Instead, Zurich argued that the professional services exclusion in its policy, which precludes coverage for bodily injury arising out of the rendering or failure to render “any professional architectural, engineering or surveying services,” applies to preclude coverage because the cyclist’s injuries allegedly arose from the engineering consulting services LiRo was hired to perform. The Appellate Division, Fourth Department, rejected Zurich’s argument and held that the cyclist’s allegations of negligent “ownership, operation, maintenance, management, construction, control and design of the … pavement” do not fall “solely and entirely within the policy exclusion.” As to Selective, the court held that the Supreme Court erred in declaring that Selective has a duty to defend the County and to reimburse past defense costs because the contract between the County and Destro is ambiguous “as to whether work in the parks was included in the scope of the paving project.” As such, neither the County nor Selective was entitled to summary judgment. The court remitted the case to the Supreme Court to determine Selective’s motion to compel discovery, including the County’s deposition, which had been erroneously denied as moot. [County of Erie v. Selective Ins. Co. of Am., et al., 2026 N.Y. Slip Op. 04092, 2026 WL 1840841 (4th Dep’t June 26, 2026)].

Second Circuit Holds Landlord’s Agent Identified As An “Additional Interest” On Policy Is An Additional Insured But Landlord Is Not

57th Avenue Associates owns a building in Queens and leases it to 21st Century Pharmacy Inc. by way of a written lease that was signed by Charles Ingber as 57th Avenue’s agent. The lease requires 21st Century to obtain general liability insurance for 57th Avenue. American European Insurance Company issued a liability insurance policy to 21st Century with an “Additional Insured – Managers or Lessors of Premises” endorsement that extends coverage to any person or organization shown in the schedule of the endorsement for liability arising out of the ownership, maintenance, or use of that part of the premises shown in the schedule and leased to 21st Century. The endorsement’s schedule is blank but states that information needed to complete the schedule is set forth in the Declarations, which identify the Queens building as the insured location and “Charles Ingber” as the “Mortgage/Loss Payable/Additional Interest.” A pedestrian tripped and fell on the sidewalk in front of the leased building and sued 21st Century and 57th Avenue. Peleus Insurance Company, 57th Avenue’s insurer, tendered 57th Avenue’s defense and indemnity to American European as an additional insured under the policy issued to 21st Century and American European disclaimed. Peleus filed an action seeking a declaration of coverage for 57th Avenue. The parties moved for summary judgment and the Eastern District of New York granted American European’s motion, declaring that American European has no duty to defend or to indemnify 57th Avenue. Peleus appealed and the Second Circuit affirmed. The court found, based upon the “undisputed facts,” that Ingber, who was identified as an “additional interest” in the policy Declarations, is an additional insured under the American European policy. However, the court rejected Peleus’s argument that the policy should be reformed, finding “there is insufficient evidence” that Ingber is incorrectly named and that the parties intended 57th Avenue to be named as an additional insured instead. Accordingly, the court found the American European policy does not cover 57th Avenue as an additional insured. [Peleus Ins. Co. v. American European Ins. Co., 25-cv-2043, 2026 WL 1783108 (2d Cir. June 22, 2026)].