In New York, differing views have been offered by the Appellate Divisions in the First and Second Departments regarding the scope of additional insured coverage when the named insured did not cause the accident. This split appears to be resolved by the New York Court of Appeals in its new decision in Burlington Ins. Co. v. NYC Transit Auth., No. 57, 2017 N.Y. LEXIS 1404 (N.Y. 2017), where the court held that additional insured coverage is only available if the named insured's conduct is the proximate cause of the underlying injuries. In its decision, the Court of Appeals made clear that "there is no coverage because, by its terms, the policy endorsement is limited to those injuries proximately caused by [the named insured]." Given the Court of Appeals' focus on policy language, this decision has the potential to impact a wide range of additional insured coverage disputes.
In brief, Breaking Solutions, Inc. purchased commercial general liability insurance from Burlington, which included an endorsement listing the NYC Transit Authority, MTA and the City as additional insureds. The additional insured endorsement at issue provides, in relevant part, that the NYC Transit Authority, MTA and the City are additional insureds:
only with respect to liability for 'bodily injury', 'property damage' or 'personal and advertising injury' caused, in whole or in part, by:
- Your acts or omissions; or
- The acts or omissions of those acting on your behalf.
The plaintiff in the underlying litigation, a NYC Transit Authority employee, allegedly sustained injuries in a fall at a construction site while he was trying to avoid an explosion that occurred after a Breaking Solutions machine touched a live, underground electrical cable. Discovery in the underlying litigation revealed that the NYC Transit Authority was at fault. As a result, Burlington denied coverage to the NYC Transit Authority and MTA on the ground that neither entity qualified as an additional insured within the meaning of the policy, because the NYC Transit Authority was solely responsible for the accident that caused the underlying injuries.
In the subsequent coverage litigation, Burlington argued that the policy did not afford coverage in such circumstances (i.e., where the additional insured was the sole proximate cause of the underlying injuries). Reversing the Appellate Division, the Court of Appeals determined 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."
This decision should provide some relief and clarification for insurers that include additional insured endorsements on their liability policies, as the Court of Appeals now has established the extent of a named insured's role in the accident for additional insured coverage to be triggered. However, insurers should be mindful of the analysis offered by the dissent, which explained that a stricter application of the policy wording should have been used to resolve the coverage question.
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