Blanket Additional Insured Endorsement Held Not Applicable

CGL – BLANKET ADDITIONAL INSURED ENDORSEMENT – "FOR THE MUTUAL BENEFIT OF" DOES NOT MEAN "REQUIRED TO NAME"
Kassis v. Ohio Cas. Ins. Co.
(4th Dept., decided 5/2/2008)

Ohio Casualty insured Superior Sign under a CGL policy containing a blanket additional insured (AI) endorsement pursuant to which the "Who Is An Insured" clause of the policy "is amended to include as an insured any person or organization who [sic] you are required to name as an additional insured on this policy under a written contract or agreement."

Superior Sign entered into a commercial lease with Kassis, which required Superior Sign to procure CGL coverage for "the mutual benefit of" both Kassis and Superior Sign, but which did not otherwise expressly require that Superior Sign name Kassis as an additional insured on Superior Sign's CGL policy with Ohio Casualty. When Ohio Casualty denied liability coverage to Kassis as an additional insured in relation to an underlying personal injury action, Kassis brought this DJ action.

In a 3-2 decision, the majority REVERSED the lower court's order and granted Ohio Casualty's cross motion for summary judgment, declaring that Ohio Casualty was not obligated to defend or indemnify Kassis in the underlying action. The majority ruled that the lease's requirement that Superior Sign procure CGL coverage "for the mutual benefit of" Kassis and Superior Sign did not trigger coverage under the blanket AI endorsement of Superior Sign's CGL policy with Ohio Casualty because it did not "require[] [Superior Sign] to name" Kassis as an additional insured. The majority noted that "it is in fact of 'mutual benefit' to Kassis and Superior Sign that Superior Sign has coverage for the risk of loss created by Superior Sign's use and occupancy of the leased property, particularly in light of the lease provision requiring Superior Sign to indemnify Kassis for loss or damage to third parties."

Justice Smith and Centra dissented based on their opinion that the lease's insurance clause as a whole evidenced an intent of the parties that Superior Sign be required to name Kassis as an additional insured, even though the lease did not actually say so.

A reversal with two dissents at the Appellate Division means an appeal by right to the New York Court of Appeals. Watch for this case to head over/up to Albany for that court's review.

Post Script (July 6, 2009) ~~ The Court of Appeals reversed this decision. Read it here.