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Appellate-Division-Restricts-Additional-Insured-Coverage

The Appellate Division, First Department recently upheld a trial court’s decision denying additional insured coverage to a landlord under two different tenant’s insurance policies in 333 Fifth Ave. v. Utica First, et.al., 2013 NY Slip Op 04707 (June 20, 2013).   In that action, a landlord and managing agent sought additional insured coverage from its tenants’ insurers for an accident that occurred when an employee of one of the tenant’s fell through an elevator shaft.

The employer’s insurer, Utica First Insurance Company, did not issue a policy with an additional insured endorsement.  The landlord and managing agent nonetheless sought additional insured coverage, claiming that because the lease required such coverage and because the Utica First Policy provided coverage for certain types of contractual liabilities, additional insured coverage was implicated.

The First Department agreed with our position and rejected the landlord and managing agent’s quest, explaining that where a policy does not contain an additional insured endorsement “the lease obligation to obtain such coverage and an exception to a coverage exclusion did not create additional insured coverage.”

The landlord and managing agent also sought additional insured coverage from Tower Insurance Company, the insurer of the tenant who provided the injured party with a key to the elevator.  Tower also denied the requested coverage, arguing that the mere fact that its insured provided the injured plaintiff with a key did not result in the conclusion that the accident arose out of its operations.  The First Department agreed with Tower as well.

This decision is an important development as it firmly rejects the attempt to create coverage where no additional insured endorsement exists and further restricts such coverage under an endorsement where a real, rather than feigned, nexus exists between the injury and the named insured.