Allstate Owes Primary Coverage To AI Due To Silent “Other Insurance” Provision

In this insurance coverage dispute the plaintiff, Valley Forge Insurance Company (VFI,) sought a declaration that the defendant, Allstate, was an insurer for and was obligated to defend and indemnify Granite Construction (Granite), on a primary basis with respect to an underlying construction-related lawsuit. Granite entered into a subcontract agreement with RISA Management (RISA).  Pursuant to the agreement, RISA was required to procure Comprehensive Automobile Liability Insurance, naming Granite as an additional insured. The subcontract also stated that any other insurance maintained by Granite shall be excess only and shall not be called upon to contribute with the insurance of RISA.  At the time of the underlying accident, RISA was the named insured under Allstate’s  business automobile liability policy.  Granite, was an additional insured under the Allstate policy and was covered by a General Liability policy issued by VFI. The Supreme Court, Kings County found that given the control RISA exercised over the truck involved in the accident, there was a reasonable possibility that the truck was covered under the Allstate policy as a hired vehicle, and that Allstate’s  duty to defend the additional insured Granite was triggered. The court also found that while VFI’s auto exclusion did not apply to defeat coverage, VFI’s coverage was excess under the “other insurance” provisions of the policy.  In particular, the VFI policy was  excess over “[a]ny of the other insurance, whether primary, excess, contingent or on any other basis: If the loss arises out of the maintenance or use of [autos] to the extent not subject to the exclusion [in the policy].” Here, the VFI policy was excess because the accident arose out of the use of an auto and the auto exclusion did not apply. In contrast, the “other insurance” provision of the Allstate policy was silent as to whether “hired auto” bodily injury coverage was primary or excess.

Valley Forge Ins. Co. v Allstate Indem. Co. 2014 N.Y. Misc. LEXIS 3366 (N.Y. Sup. Ct. July 25, 2014)

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