Many commercial leases require tenants to obtain additional insured coverage in favor of the landlord for any claims arising out of the leased premises. But this coverage is not a complete substitute for the landlord’s own coverage, as recently seen in  625 Ground Lessor LLC v Continental Cas. Co. 

In 625 Ground Lessor, the underlying plaintiff was injured when she slipped and fell walking through the lobby of the building to enter the elevator and she sued the building’s landlord. Her employer leased space on the seventh through eleventh floors of the building. The landlord filed a declaratory judgment action against the employer’s insurer, seeking additional insured coverage under the tenant employer’s insurance policy.

The trial court found that there was no coverage because the additional insured endorsement only provided coverage for accidents occurring on the leased premises. The trial court noted that the subject lobby and elevator were available to all of the building tenants’ employees and that the tenant employer made no special or exclusive use of the elevator or lobby area where the accident occurred.

The Appellate Division, First Department affirmed the trial court’s decision and determined that the area where the accident occurred was outside of the leased premises and was no more necessary to the operation of the tenant employer’s business than the operation of any other commercial tenant in the building. The First Department found that the landlord’s claim for additional insured coverage was therefore precluded by the terms of the additional insured endorsement.

Thanks to Jorgelina Foglietta for her contribution to this post and please write to Mike Bono for more information.