In a decision that could substantially impact the scope of Additional Insured coverage afforded by General Liability policies, New YorkaEUR(TM)s First Appellate Department recently held in W&W Glass Systems, Inc. v. Admiral Insurance Co., No. 6592, 111707/09, 2010 N.Y. Misc. LEXIS 3756, at *2aEUR"3 (N.Y. App. Div. 1st DepaEUR(TM)t Jan. 19, 2012), that the aEURoecaused by your ongoing operations performed for [the Named Insured]aEUR? trigger found in certain Additional Insured Endorsements, including the subject Endorsement at issue therein, does not aEURoematerially differaEUR? from the more traditional aEURoearising out ofaEUR? trigger used in many Additional Insured Endorsements.
By way of background, General Liability insurers typically limit Additional Insured coverage based on the interplay between the Additional Insured, the Named Insured, and the subject accident. As a general matter, Additional Insured coverage is not triggered under a General Liability policyaEUR(TM)s Additional Insured Endorsement unless the alleged injury was either aEURoecaused byaEUR? or aEURoearose out ofaEUR? the acts or omissions of the Named Insured on behalf of the purported Additional Insured. Traditionally, General Liability insurers used the broad aEURoearising out ofaEUR? language in their Additional Insured Endorsements, but in light of numerous cases decided in New York, wherein the aEURoearising out ofaEUR? trigger was given an extremely expansive meaning and application by the Courts, certain insurers responded by amending their Additional Insured Endorsements, replacing the aEURoearising out ofaEUR? trigger with the narrower aEURoecaused byaEUR? standard in an attempt to better adhere to the true intent and nature of the Endorsement.
While there is a dearth of case law in New York regarding the practical difference between these two standards, trial courts in New York, including the trial court that decided W&W Glass, have held that the aEURoecaused byaEUR? language is narrower than the aEURoearising out ofaEUR? language. Compare W&W Glass Sys., Inc. v. Admiral Ins. Co., 111707/09, 2010 N.Y. Misc. LEXIS 3756, at *5 (N.Y. Sup. Ct. July 29, 2010) (noting that the aEURoecaused byaEUR? language is aEURoemore restrictiveaEUR? than the aEURoearising out ofaEUR? standard), and 373 Wythe Realty, Inc. v. Indian Harbor Ins. Co., 2010 U.S. Dist. LEXIS 45947, at *8aEUR"9 (E.D.N.Y. May 10, 2010) (noting that the aEURoecaused byaEUR? language aEURoeis invoked once a lawsuit alleges that an additional insured is responsible for the conduct of named insuredaEUR?),with BP Air Conditioning Corp. v. One Beacon Ins. Grp., 871 N.E.2d 1128, 1132, 8 N.Y.3d 708, 715 (N.Y. 2007) (holding that the mere aEURoepossibilityaEUR? that the accident aEURoearose out ofaEUR? the Named InsuredaEUR(TM)s ongoing operations for the Additional Insured was sufficient to trigger Additional Insured coverage under the aEURoearising out ofaEUR? standard).
Now, based on the holding in W&W Glass, New YorkaEUR(TM)s First Department has essentially conflated the broad aEURoearising out ofaEUR? language and the more limited aEURoecaused byaEUR? language, holding that the two standards are substantially the same in meaning and as such, should be interpreted in the same manner.
We note that the First DepartmentaEUR(TM)s decision in W&W Glass only pertains to an insureraEUR(TM)s duty to defend, which is broader than the duty to indemnify. Accordingly, in the event that a General Liability insurer decides to provide a defense to an Additional Insured based on the broad reading of aEURoecaused byaEUR? espoused by the First Department in W&W Glass, we recommend that any coverage be provided subject to a reservation of rights, specifically reserving the right to seek past Defense Costs, to the extent it is ultimately determined that the alleged accident was not aEURoecaused byaEUR? the Named Insured.
For more information on this matter, please contact the attorneys in KDVGaEUR(TM)s Insurance Coverage & Monitoring practice group or go to www.kdvglaw.com.
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