ADDITIONAL INSURED CONSIDERATIONS AT THE CLAIM DESK
I . BASICS
A. An Insurer's Duty To Defend Its Insured Is Exceedingly Broad
1. Facts or allegations which bring the claim even potentially within the protection
2. Regal Constr. Corp. v. National Union 15 N.Y.3d 34 (C.A. 2010)
3. Defend even though not be required to pay once the litigation has run its course." (i) BP A.C. Corp. v. One Beacon Ins. Group, 8 N.Y.3d 708 (C.A. 2007)
B. Applies Equally To Additional Insureds And Named Insureds.
1. (Additional insured) enjoys the same protection as the named insured.
(i) BP A.C. Corp. v. One Beacon Ins Supra.
(ii) Regal Constr. Corp. v. National Union Fire Ins. Supra
C. Scope Of Additional Insured K Language Equally Broad
1. Contractual provision requiring party named as an additional insured
2. Insures for all liability arising out of the activities covered by the agreement.
(i) Pecker Iron Works 736 N.Y.S.2d 103 (2AD.2002) affirmed 99 N.Y.2d 393
3. Scope is for "not ... the precise cause of the accident, ... but
4. General nature of the operation in the course of which the injury was sustained" (i) Consolidated Edison Co.. v. Hartford 203 A.D.2d 83 (1st Dept.,1994
D. Additional Insured 1 Indemnification available before Negligence determined.
1. Agreement to procure insurance not equal indemnify and hold harmless (i) Kinney v. Lisk Co.,76 N.Y.2d 215, (C.A. 1990)
2. An appropriate loss allocation device
3. Not implicate statutory prohibition against indemnifying another's negligence
(i) McKinney's General Obligations Law § 5-322.1.
(ii) Tishman Constr.. CNA Ins. Co.,_236 A.D.2d 211 (1st Dept. 1997)
II CHOICE OF LAWS : Varies not only State but by Division as well.
A. Downstate Interpretations of Additional Insured Endorsements broader Petrillo Stone Corp. v. QBE Ins. Corp. 984 N.Y.S.2d 634 (Table) N.Y.Sup.,2014.
1. Additional Insured endorsement covers employee of a subcontractor injured
(i) during the course of his employment
(ii) while doing work for the Additional Insured
(iii) even where the injuries were the result of the negligence of
a. the Additional Insured,
b. another subcontractor at the scene,
or the plaintiffs own fault
B. Deciding which State law controls interpretation can be uncertain.
1. Domicile of Contractor providing Additional Insurance Coverage would control. (i) Lloyd's, London v. Foster Wheeler Corp. 36 A.D.3d 17, NYAD 1 Dept.,2006.
2. Upset rule with decisions deciding question of "grouping of contacts' analysis. (i) Better for NY General Contractor and Owners, less predictable and certain.
a. Davis & Partners LLC vs. QBR113 A.D.3d 544 N.Y.A.D. 1 Dept.,2014
b. Illinois Nat. v. Zurich American 969 N.Y.S.2d 11 N.Y.A.D. 1 Dept.,2013.
III. "ILLUSORY" COVERAGE
A Anticipated Coverage can be ruined by Exclusions for "own employee"
1. This insurance does not apply to
(i) Employee of insured, contractor for insured or employee of contractor, if: a. Claim for injury arises in employment of contractor, which insured is liable;
(ii) Obligation of insured to indemnify with another because of bodily injury damages
B. Unsuccessfully argued that coverage containing this exclusion is Illusory
1. Sigma Contracting Corp. v. Everest Nat. Ins. Co. 907 N.Y.S.2d 104 N.Y.Sup.,2010
C. A good idea to make sure coverage with this exclusion is not used in the first place.
i. Provide that insurance cannot be purchased through carriers known to use this
ii. Provide that insurance must be purchased through carriers known Not to use it
iii. Confirm compliance and get proof before signing Contract
iv. Have policy submitted with bid and as a condition of getting work.
D. Good claim practice to give a retrospective observation to the insureds and clients.
1. Even when it is too late;
(i) Often Real Estate entities can benefit by avoiding problems in the future.
(ii) Beneficial not only to client but also to carrier.
IV TENDERING A DEFENSE AND LATE NOTICE
A. The Tenders have to go out to All Levels, including Excess Coverage
B. New York is now a "No Prejudice State":
i. Regarding Policies written after 111109
ii. Still a window of older policies being involved.
iii. Late Notice Defenses Frowned on.
iv. Common example of Prejudice from Late Notice is where a default is already taken.
1. Insurance Law 3420: [c](2)(B)
(i) presumption of prejudice if, prior to notice, insured's liability determined; or claim resolved.
C. Possible exception where Default is lifted.
1. Castillo v. Prince Plaza, LLC 43 Misc.3d 335, 981 N.Y.S.2d 906 N.Y.Sup.,2014
(i) Presumption of prejudice from late notice not apply where judgment entered prior to notice but vacated after.
V. OTHER INSURANCE
A. A provision found in both property and liability insurance policies:
1. Establishes apportionment when more than one policy covers same loss. (i) Some policies provide no coverage some a pro rata share, others apply in excess.
2. Where same risk is covered by two or more policies...
(i) priority of coverage (or allocation) determined by comparison of respective other insurance clauses.
3. Where "other valid and collectible insurance is available"
B. Expectation of Primacy where Subordinate entity adds an additional insured.
4. Other Insurance
1. If other insurance available to insured for loss we cover ... our obligations are limited... b. Excess Insurance: This insurance is excess over:...
"(2) Any other insurance, whether primary, excess, contingent or any other basis that is valid and collectible insurance available to you as an additional insured under a policy issued to: (a) A contractor performing work for you."
1.Excess "other insurance" an insured receives trumps "pro rata other insurance clause." (i)Sport Rock Intl., Inc. v. American Cas. Co., 878 N.Y.S.2d 339; (ii)QBE Ins. v. Public Service Mutual Ins., 958 N.Y.S.2d 103 [1st Dept.2013].)
C. The words "excess coverage" alone, however, are not magic.
1. When each policy contains an excess "other insurance clause" this:
(i) Would leave no primary insurance.
(ii) Insurers are required to cover loss on pro rata basis.
2. Central Park Studios, Inc. v. Slosberg 121 A.D.3d 562 N.Y.A.D. 1 Dept. 2014.
(i) Language in Delos policy not negate possibility of contribution from other insurers
(ii) Policy not contain "other insurance" Delos excess fails to indicate it's premium.
a. Indicium of intent to provide insured with tier coverage at reduced premium.
(iii) Bovis Lend Lease, 53 A.D.3d at 148, 855 N.Y.S.2d 459
VI. EXPECTATIONS OF COUNSEL
A. Provide good counsel of Choice of Laws Issues
B. Provide good counsel on Policy Interpretations, Limits, Contractual Risk Transfer
C. Discovery Demands have to ensure that entire Policies are obtained and that all insurance policies including excess are obtained.
i. When your policy is going to be provided it is customary to redact sensitive financial information.
ii. Names of other additional insured may itself be competitive information
iii. In certain cases a protective order, attorney eyes only or even two iered provisions may be desired.