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Additional Insured Coverage Under Subcontractor’s CGL Policy Primary Over General Contractor’s Own Policy

On July 23, 2018, Justice Edmead of the New York County Supreme Court issued a decision Tricon Constr., LLC v Main St. Am. Assur., 2018 NY Slip Op 31721(U), holding that additional insured coverage for a general contractor under a sub-contractor’s CGL policy was primary over the GC’s own liability coverage. In Tricon, a general contractor (Tricon) sought coverage for a personal injury action as an additional insured under the CGL policy of its subcontractor (Boyle), issued by Main Street America Insurance Company (MSA). Tricon also had its own CGL policy issued by Grange Mutual Casualty Company. The question before the Court was:  which coverage was primary – the additional insured coverage under the “Contractors Extension Endorsement” to the MSA Policy, or the coverage under Tricon’s own policy? The Grange policy specified that it was excess over “[a]ny other primary insurance available to [Tricon].” The MSA policy likewise provided excess coverage to the named insured.  However, the “Contractors Extension Endorsement” provided that the additional insured coverage would be primary “[i]f a written contract or agreement . . . requires this insurance to be primary for any person or organization.”  Tricon’s subcontract with Boyle provided that Tricon and the property owner “shall appear as additional insureds on any [] insurance policies maintain or procured by [Boyle].” 

Although the subcontract did not explicitly address the issue, Justice Edmead held that the additional insured coverage was primary, explaining:

Plaintiffs argue that there is an implication of primacy in the Tricon/Boyle agreement’s requirement that Boyle procure additional insured coverage for Tricon. In support of this reading of the agreement, plaintiffs cite to Pecker Iron Works of NY v Travelers Ins. Co., (99 NY2d 391[2003]). Pecker Iron Works held that coverage for additional insureds is primary unless the parties unambiguously state otherwise (id. at 393). The Court of Appeals' holding was based on the meaning of "additional insured," which, the Court noted, was "well-understood" to be "an entity enjoying the same protection as the named insured" (id. at 393 [internal quotation marks and citation omitted]). Thus, plaintiffs are clearly correct that, as the parties have not explicitly made Tricon's additional insurance excess, the agreement between Tricon and Boyle requires the MSA policy to be primary for Tricon. Thus, the "Contractors Extension Endorsement" in the MSA policy is applicable, as is "Other Insurance" provision in the Grange policy. Both point to the conclusion that Grange's policy is excess over the primary coverage provided to Tricon by the MSA policy.

The result here was sensible — both policies can’t be excess, and it is reasonable to infer that the parties intended for additional insured coverage to be primary.  Still, the Court of Appeals decision Justice Edmead cited (Pecker Iron Works) is arguably distinguishable, since in that case, unlike here, the subcontractor’s policy was primary as to the named insured.  So the Court of Appeals’ reasoning that the additional insured is entitled to “the same protection as the named insured” doesn’t resolve the priority issue in this case where the subcontractor’s policy was excess as to the named insured.

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