The fight for additional insured coverage is central to the game of risk transfer. NY’s highest court, the Court of Appeals, has again weighed in on the subject.
In the case of Regal Construction Corp. v. National Union Fire, 2010 NY Slip Op 04661 (6/3/10), URS was hired by the City of New York to serve as a construction manager. URS hired Regal as a prime contractor. Pursuant to contract, Regal was obligated to procure a CGL policy that named URS as an additional insured. The policy Regal obtained was with Insurance Corporation of New York and contained a limitation that URS was only an additional insured “with respect to liability arising out of [Regal’s] ongoing operations performed for [URS].” As luck would have it, Regal’s project manager, Ronald LeClair was walking through the job site when he slipped and fell on a URS improperly painted joist and injured his back. He thereafter commenced a lawsuit against the City and URS.
A coverage action ensued in which Insurance Corp argued that because the claim did not arise out of Regal’s work, but rather exclusively URS’s work [and negligence], there was no duty to defend or indemnify URS.
The Court of Appeals disagreed with URS. It held that the “phrase “arising out of” in an additional insured means:
“originating from, incident to, or having connection with” (Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467, 472  ). It requires “only that there be some causal relationship between the injury and the risk for which coverage is provided” (id.) and the “focus of the inquiry “is not on the precise cause of the accident but the general nature of the operation in the course of which the injury was sustained” ([i]Worth, 10 NY3d at 416 [internal quotation marks and citation omitted]).
In light of this case law, the Court held that Insurance Corp was obligated to defend or indemnify URS even though the accident was solely the result of URS negligence.
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