Coverage Calculus -- Determing the Priority of Coverage Between Owner/General Contractor's and Subcontractor's GL Policies

CGL – ADDITIONAL INSURED – OTHER INSURANCE – PRIORITY OF COVERAGES
Briarwoods Farm, Inc. v. Central Mut. Ins. Co.
(Sup. Ct., Orange Co., decided 10/29/2008)

I'll start with the last footnote of this decision:  "Despite this Court's best efforts in examining the approximately fifty(52) pages of single space, multiple columned pages that Central's counsel submitted as the Central Policy, no clauses concerning 'method of sharing' or 'contribution' could be found."  No one ever said this insurance coverage stuff was going to be easy.  There's nothing wrong with excerpting and highlighting relevant coverage provisions into separate exhibits for the court's ease of reference.  We do it in my office all the time. 

Briarwood Farms and its shareholders sought coverage as additional insureds under a commercial general liability (CGL) policy issued by Central Mutual Insurance Company to subcontractor Leonard Rosado, who was injured while working on Briarwood's job site and later died.  The wrongful death action was settled by Briarwood's CGL insurer, Indian Harbor Insurance Company, which presumably financed this declaratory judgment and coinsurance action in the name of Briarwood against Central Mutual, seeking to recover primary additional insured coverage under Rosado's policy.

In finding both Central Mutual and Indian Harbor policies to owe co-primary coverage for the wrongful death action, Orange County Supreme Court Justice William Giacomo held:

This Court holds that under the present law, absent a showing that a general contractor was actually seeking excess coverage rather than primary coverage, a subcontract's language calling for coverage of the general contractor/owner as an "additional insured" requires the subcontractor to provide primary coverage. Accordingly, this Court concludes that the insurance afforded under the Central Policy to the Herskowitz Plaintiffs was primary coverage.

This Court also holds that under the present state of the law, a determination that the insurance policy of the subcontractor is primary coverage to the general contractor/owner, does not preclude a determination that the insurance policy of the general contractor/owner also provides primary coverage. Thus, even though the Central Policy provides primary coverage to the Herskowitz Plaintiffs as "additional insureds", the Herskowitz Plaintiffs' own policy also provides for primary coverage rendering both policies equally obligated to cover the costs associated with the settlement of the underlying wrongful death action.

In other words, a binocular comparison of the competing "other insurance" clauses of the owner/GC's and subcontractor's policies is still necessary to make a  priority of coinsurance determination,  Pecker Iron Works of New York, Inc. v. Traveler's Ins. Co. (99 NY2d 391 [2003]) notwithstanding.  See the decision for Justice Giacomo's methodical analysis of the coinsurance issues.