HNRK Coverage Corner

Construction begets injuries, which beget lawsuits, which beget liability insurance claims, which frequently beget coverage disputes and litigation that raise a unique set of issues (see previous Coverage Corner posts on construction insurance issues here). Today at the Coverage Corner, we examine a recent Second Circuit decision that takes a deep dive into the canons of construction (think contra proferentem, the “rule of the last antecedent” and the “series qualifier canon”) to resolve a dispute over insurance coverage for a real-life construction injury claim (think hard hats, concrete and scaffolding).  The panel ruled in favor of the insured, a general contractor, over a feisty dissent from Judge Menashi, who accused the majority of constructing “a contract to which the parties did not agree.”

The Background

On February 12, 2026, the Second Circuit issued a decision in Reidy Contracting Group, LLC v. Mt. Hawley Ins. Co., Case No. 24-1069, an insurance coverage action arising from a demolition project at 160 Lexington Avenue in Manhattan.  A ceiling collapsed at the project site, injuring three workers, who filed suit against the general contractor, Reidy, which in turn sought insurance coverage under the commercial general liability policy of its sub-contractor, Vanquish.  Sub-contractors are typically contractually obligated to obtain liability policies naming “upstream” parties (i.e., the general contractor, construction manager, or property owner) as additional insureds.  The contractor often accomplishes this by purchasing a blanket “additional insured” endorsement from its liability insurer, providing coverage for any party “the named insured is obligated to name as an additional insured by virtue of a written contract or agreement.”  3 Couch on Insurance ? 40:30. In this case, Reidy required its sub-contractor, Vanquish, “to procure insurance that would protect Reidy as an additional insured from claims arising, inter alia, ‘out of or in any way connected with the operations performed hereunder by or on behalf of [Vanquish] . . without regard to the negligence of any of them or any
. . . other subcontractor.”  Reidy tendered the claim to Vanquish’s CGL carriers, but the excess carrier, Mt. Hawley raised two coverage defenses, which are discussed, in turn, below.

The "Last Antecedent Rule” vs. the “Series-Qualifier Canon”: Is Reidy an Additional Insured Under the Vanquish Policy?

Mt. Hawley’s first argument was that Reidy did not qualify as an additional insured under the sub-contractor’s policy.  The Vanquish policy’s blanket additional insured provision stated:

Any entity required by written contract . . . to be named as an insured is an insured but only with respect to liability arising out of [Vanquish’s] premises, “[Vanquish’s] work” for the additional insured, or acts or omissions of the additional insured, in connection with their general supervision of “[Vanquish’s] work”.

Here, there was no dispute that Vanquish was “required by written contract” to name Reidy as an additional insured.  Moreover, the liabilities at issue necessarily arose from “Vanquish’s work,” as the Vanquish employees were the only parties present at the site at the time of the ceiling collapse. The first coverage dispute turned on the application of the qualifying phrase “in connection with their general supervision of ‘[Vanquish’s] work’.”  One canon of construction—the “last antecedent rule”—counsels that “[a] limiting clause or phrase . . . should ordinarily be read as modifying only the noun or phrase that it immediately follows.”  If that rule applied, Reidy would be covered as an additional insured, even though it did not supervise Vanquish’s work on the date of the accident, since the qualifier “in connection with” would not apply to claims arising from “Vanquish’s work.”  But Mount Hawley argued that the qualifying phrase should be applied to the entire series that precedes it under the so-called “series-qualifier canon.”  As the panel acknowledged, ordinarily when a qualifying phrase is preceded by a comma, courts apply the series-qualifier canon, rather than the “last antecedent rule.”  But not so fast.  The policy language here contains “nested disjunctive lists”—“Vanquish’s premises, Vanquish’s work for the additional insured, or the additional insured’s acts or omissions, in connection with . . .”  The Court declined to apply the series-qualifier canon to both disjunctive phrases, holding instead that “in connection with” modified only “the additional insured’s acts or omissions.”  The upshot was that Reidy qualified as an additional insured with respect to any claims arising out of “Vanquish’s work for the additional insured.” 

The Court’s linguistic parsing of the policy language also comported with “the main object of the purchased coverage”:  that is, to protect Reidy against “the risks inherent in hiring a subcontractor,” which “include both suits for contributory negligence and vicarious liability for a subcontractor’s negligence.”  Mt. Hawley’s interpretation would have left Reidy without coverage for its potential vicarious liability, and the Court declined to “adopt an interpretation that would virtually nullify the coverage sought for anticipated risk.”

“Any Insured” vs. “The Insured”:  Does The Employers Liability Exclusion Preclude Coverage?

The Second Circuit panel was divided as to Mt. Hawley’s second coverage defense.  The policy’s Employers Liability Exclusion precluded coverage for “bodily injuries suffered by an ‘employee’ of any insured arising out of and in the course of . . . employment by the insured.”  (Cleaned up and emphasis added).  Mt. Hawley argued that “employment by the insured” referred  to “the immediate antecedent, ‘any insured,’” which encompasses both Vanquish as the named insured or Reidy as additional insured.  Therefore, the exclusion applied to the claim at issue “because an employee of ‘any insured’—Vanquish—was injured in the course of employment for that insured.”  The majority conceded that this reading was “reasonable” but found that “another interpretation is even more plausible, particularly in light of the customs, practices, uses and terminology of the business.” 

The Court first pointed to the policy’s Separation of Insureds provision, which provided that the policy applies “separately to each insured against whom claim is made or suit is brought.”  Earlier Second Circuit precedents had interpreted similar contract language to connote that “the insured” refers to “the entity seeking coverage.”  Here, the Court noted, “employees of ‘any insured,’ Vanquish, were injured, but not in the scope of their employment for Reidy.”  And because “Reidy is the insured seeking coverage, the Exclusion does not apply.”  The Court found that limiting the scope of the Employers Liability Exclusion to injury claims by employees of the insured entity seeking coverage “makes excellent sense, since such risks would be expected to be covered by workmen’s compensation insurance.”  Ultimately, the majority concluded that the exclusion was ambiguous (i.e., susceptible to two reasonable readings), and because Mt. Hawley offered no extrinsic evidence to support its interpretation, the Court applied the canon of contra proferentem to construe the ambiguous language against the insurer, as the drafter of the policy, and in favor of coverage.

In a strongly-worded dissent, Judge Menashi contended that an “ordinary reader” of the exclusion “would understand that ‘the insured’ refers back to ‘any insured.’”  And therefore, ‘the insured’ denotes whichever of the insureds—Vanquish or Reidy—oversees the employee who suffered bodily injury.”  The dissent found the policy to be unambiguous, concluding that the court “may not make a new one under the guise of construction.”

Takeaways For Policyholders and Their Counsel

A few takeaways from this interesting decision:

Any property owner, GC or other party relying on additional insured coverage from the CGL policy of a subcontractor or other third party should ask to see a copy of the policy before any work commences.  Certificates of insurance, which do not show the precise policy terms, are not enough.  Depending on the wording, an employer liability exclusion can have the effect of precluding coverage for one of the most likely claims (injuries to a subcontractor’s employee), even though the GC or property owner isn’t the injured worker’s employer and won’t have worker’s compensation insurance for that loss.

It is notable that, despite the majority’s reliance on various canons of construction, the Court also focused on the practical implications of its interpretation of the policy language—e.g., avoiding readings that would “nullify the coverage sought for anticipated risk.”  Lawyers should bear in mind that while interpretive canons are a useful tool, it is important to show that the resulting construction of the policy is reasonable.