Coverage Pitfalls for Additional Insureds: Interplay With SIRS and "Other Insurance Provisions," Interpreting AI Endorsements

Description

Companies or contractors may be at risk when added as an additional insured (AI) on a subcontractor’s CGL policy with a SIR. Some courts have ruled that the AI is not entitled to a defense or indemnity until the named insured satisfies the SIR.

When an entity qualifies as an AI and several policies cover the same risk, counsel must determine the priority of coverage under applicable policies. The “other insurance” provisions need to be analyzed to determine which policy applies as primary or excess, or if multiple policies apply as coinsurance.

A recent New York case demonstrates another pitfall for AIs. In Burlington Ins. Co. v. NYC Transit Auth. (N.Y. Ct. App. June 6, 2017), the court denied AI coverage to contractors MTA and NYCTA for purposes of a loss caused by an act of a named insured subcontractor.

The court held that the policy’s language providing coverage for liability “caused, in whole or in part, by” the named insured applies only to injuries proximately caused by the named insured. The court also ruled that there was AI coverage only for the named insured subcontractor’s negligent acts. Because the court determined that the named insured did not proximately cause the injury and was not negligent or otherwise at fault, there was no coverage for the AIs.

Listen as our authoritative panel of insurance attorneys analyzes risks facing AI contractors in ensuring adequate coverage. The panel will discuss the presence of a SIR in the named insured’s policy, the impact of “other insurance” provisions in subcontractor’s policies, and the interpretation of the insuring clause in the AI endorsement.