The scope of additional insured coverage has been a hot topic in New York during the last few years. The most common fact pattern involves an accident on a construction project or leased property.
New York’s highest court recently addressed the scope of coverage afforded a landlord under its tenant’s commercial general liability policy. In Kassis v. Ohio Casualty, the lease required the tenant to maintain a general liability policy “for the mutual benefit” of the landlord and tenant against claims for, among other things, bodily injury. As luck would have it, an employee of the tenant slipped and fell on the property and sued the landlord who was the only deep pocket not otherwise immune from suit by the workers compensation bar.
The tenant obtained a CGL policy with Ohio Casualty, which included a broad form, automatic additional insured provision that extended coverage to “any person or organization whom [the named insured is] required to name as an additional insured on this policy under a written contract or agreement.” The key issue was whether the lease term that required the tenant to obtain CGL coverage “for the mutual benefit of” the landlord and tenant triggered the policy’s additional insured provision.
The Court of Appeals observed that an additional insured generally enjoys the same coverage –unless limited in the AI language– as the named insured. It then held that the only reasonable interpretation of the lease language [“for the mutual benefit of”] was that the landlord was entitled to the same level of coverage as the tenant. Case closed and victory for the policyholder.
The lesson for insurers is clear: express any limitations on coverage extended to additional insureds clearly and unequivocally. The trend in New York is to read these provisions expansively.