The Breadth of Additional Insured Coverage -- Proving a Negative

CGL – ADDITIONAL INSURED – SCOPE OF COVERAGE – DUTY TO DEFEND
City of New York v. Philadelphia Indem. Ins. Co.
(2nd Dept., decided 9/9/2008)

"Exceedingly broad"
"Reasonable possibility of coverage"
"Common speech"
"Reasonable expectations"
"Read as a whole"

Phrases that portend an insurer-adverse result, fo sho. Like when the A-word is dropped. The stuff that on page 3 of a memorandum decision foretells judgment for the insured on page 6. Such was the case in this matter, in which the Second Department used the full array of these catch phrases to AFFIRM Kings Supreme's finding that Philadelphia Indemnity was obligated to defend the City of New York in an underlying personal action.

Once the City tendered evidence sufficient to demonstrate, as a matter of law, that it was an additional insured as that term was defined by Philadelphia's policy, and that the allegations in the underlying complaint fell within the scope of coverage, the burden then shifted to Philadelphia to establish the absence of coverage, which the Second Department ruled it failed to do:

Here, the interpretation favored by the defendant reflects "extremely narrow coverage" (City of New York v Evanston Ins. Co., 39 AD3d 153, 157). Such an interpretation would rewrite the policy without regard to the plaintiff's reasonable expectations as expressed in the contract between it and the named insured, and provide a windfall for the defendant (see BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 716).

The court's citation to the City of New York v. Evanston Ins. Co. case suggests (but does not actually reveal) that Philadelphia's policy language made the City an additional insured only if the "claim, loss or liability is determined to be solely the negligence or responsibility of [Philadelphia's named insured]". In Evanston, presumably like here, the Second Department rejected the insurer's argument the additional insured coverage to the City did not apply unless the named insured was solely responsible for the accident and injuries at issue. Instead, the Second Department agreed with the City's reading of the word "solely" to refer only to an apportionment of fault as between the contractor/subcontractor named insured and the additional insured City, without regard to the potential liability of third parties. Under such an interpretation, the City would be an additional insured under the policy if the contractor/subcontractor named insured bore some responsibility for the accident and the City itself bore none. Solely vis-à-vis the named insured (NI) and the additional insured (AI), in other words.