Definition of “Premises” Defines Extent of Coverage (PA)

A Pennsylvania federal court recently decided whether a landlord’s insurer can shift a shopping center’s responsibility in a slip and fall case to a tenant’s insurer, in Liberty Mutual Insurance Co. v. Selective Insurance Co. of America, case number 2:16-cv-00759, U.S. District Court for the Eastern District of Pennsylvania.

In this case, the plaintiff was injured while tripping on an allegedly defective sidewalk outside of Business 21 Publishing LLC, a tenant of Stoney Creek Center.  The plaintiff, an employee of Business 21, ultimately sued Stoney Creek Center and received a confidential settlement.  Stoney Creek Center’s insurer sought reimbursement from Business 21’s insurer for costs associated with defense and settlement of the suit, believing it was an additional insured under its policy.

Business 21 held a liability policy that extended additional insured status to companies that owned and operated the shopping center for claims of bodily injury involving premises owned or used by Business 21.  Stoney Creek Center believed it was an additional insured under Business 21’s policy, taking the position that “premises” included both internal offices and outside common areas.

In deciding whether additional Stoney Creek Center is owed insured status, the court turned its focus on the meaning of the word “premises” as used in the additional insured endorsement of Business 21’s policy.  The judge decided that Business 21’s lease agreement with Stoney Creek Center defines the word “premises” and not the policy.  The judge ruled that the terms of the lease agreement make a clear distinction between Business 21’s internal office space and its right to use the outside common areas, demonstrating that Business 21 intended for “premises” to solely mean its internal offices and not outside common areas such as the walkways and parking lot, thus determining that there was no additional insured coverage owed.

Thanks to Chelsea Rendelman for her contribution to this post.