What's In an Adjective? -- Contractor's Oral Agreement to Name Owner as Additional Insured Enforced Against Contractor's CGL Insurer

CGL – ADDITIONAL INSURED – CERTIFICATE OF INSURANCE – ORAL AGREEMENT TO NAME OWNER AS ADDITIONAL INSURED
Superior Ice Rink, Inc. v. Nescon Contr. Corp.
(2nd Dept., decided 6/17/2008)

Nescon contracted with Superior Ice Rink to paint the roof of Superior's facility.  Superior's manager and Nescon's principal orally agreed that in order for Nescon to perform any work, Nescon had to name Superior as an additional insured under an insurance policy issued to Nescon by Merchants Mutual Insurance Company.  Nescon requested and obtained from its insurtance broker a certificate of insurance indicating that Superior was an additional insured under the Merchants policy.

In a section entitled "Additional Insureds-By Contract, Agreement or Permit," Nescon's policy with Merchants provided that any organization Nescon was required by "a written contract, agreement or permit" to name as an insured would be included as an insured with respect to liability arising out of Nescon's work performed for that organization at the location designated in "the contract, agreement or permit."

Two Nescon workers were injured during the job and sued Superior, which tendered to Merchants. Merchants disclaimed coverage on the ground that Nescon had no written agreement with Superior to name it as an additional insured.

On motions and cross motions for summary judgment, the Nassau County Supreme Court agreed with Merchants and upheld its disclaimer.  In MODIFYING that order to reverse the granting of summary judgment to Merchants, the Second Department held:

When determining whether a third party is an additional insured under an insurance policy, a court must ascertain the intention of the parties to the policy, as determined from within the four corners of the policy itself (citations omitted). * * *

When the terms and conditions of an insurance policy are clear and unambiguous, the construction of the policy presents questions of law to be determined by the court (citation omitted). Merchants contends that it is clear that the word "written" in the phrase "written contract, agreement or permit" modifies the words "contract," "agreement" and "permit," and hence, that Superior was not an additional insured because Nescon was not required by a written contract, written agreement or written permit to name Superior as an insured under Nescon's policy. However, since the word "written" could also be reasonably interpreted to only modify the word "contract," we find that the phrase is ambiguous (citation omitted).

* * * * *

Applying these principles, we conclude that Nescon's policy must be interpreted as providing that any organization Nescon was required by an oral or written agreement to name as an insured under the policy would be an additional insured under the policy. Since the record demonstrates that Nescon was required by an oral agreement to name Superior as an insured under the policy, the Supreme Court should have granted Superior's cross motion for summary judgment on the complaint insofar as asserted against Merchants and declaring that Merchants is obligated to defend and indemnify Superior in the underlying personal injury actions, and denied Merchants' motion, in effect, for summary judgment dismissing the complaint insofar as asserted against Merchants and declaring that it is not so obligated.