HNRK Coverage Corner

On March 5, 2019, the First Department issued a decision in M&M Realty of N.Y., LLC v. Burlington Ins. Co., 2019 NY Slip Op 01513, holding the extrinsic evidence of the parties’ intent precluded summary judgment on a property owner’s status as an additional insured under a contractor’s CGL policy.

The standard additional insured endorsement at issue in this case provided coverage to any “person or organization” for the whom the contractor was performing services if the contractor had “agreed in writing in a contract or agreement that such person or organization be added as an additional insured on [the contractor’s] policy.”  In a decision previously covered on this blog, Justice Edmead of the New York County Supreme Court held that (1) the contract between the property owner and the contractor was ambiguous as to the intent to name the property owner as an additional insured (it required that “insurance” be provided but did not define the “necessary . . . insurance”); but (2) extrinsic evidence in the form of deposition testimony established “the parties’ intent to confer additional insured status” on the property owner. 

The First Department reversed, holding that “the extrinsic evidence properly considered by the motion court does not conclusively demonstrate the parties’ intent . . . but presents an issue of credibility to be determined by a factfinder.” This decision illustrates the importance of ensuring – before work on a construction project commences – that the underlying agreements have the necessary language to trigger the additional insured endorsements in a contractor’s or sub-contractor’s CGL policy.  A great deal of collateral litigation (including depositions, a summary judgment motion, a trip to the First Department, and now a trial on remand) could have been avoided if the property owner had coverage counsel review the agreements and the CGL policy in advance.