A New York appellate court ruled recently in Hanover Insurance Co. v. Philadelphia Indemnity Insurance Co., 2018 NY Slip Op 02121 (1st Dep’t March 27, 2018), that an insurance policy did not cover an additional named insured over a personal-injury lawsuit arising from its alleged negligence because coverage was limited only to injuries caused by the named insured. This decision again underscores, as we advised in a recent Blog Post addressing JP Energy Marketing LLC v. Commerce and Industry Insurance Co. (which can be found here), the importance of carefully evaluating the wording of “additional insured” provisions, which can vary widely in scope and effect.
Manhattan School of Music was an additional named insured under an insurance policy issued by Philadelphia Indemnity Insurance Co. to Protection Plus Security Corporation. The insurance policy provided that Manhattan School was an additional insured, but “‘only with respect to liability for bodily injury … caused, in whole or in part, by’ the acts or omissions of Protection Plus in the performance of its operations for the Manhattan School.”
In the underlying personal-injury lawsuit, a security guard employed by Protection Plus to work at Manhattan School sued Manhattan School for a fall allegedly caused by a recently mopped floor.
The Appellate Division held that Philadelphia Indemnity was not required to defend or indemnify Manhattan School over the security guard’s lawsuit. The Court focused on the wording of the insurance policy’s additional-insured provision and, in particular, the phrase “caused, in whole or in part, by.” Applying a 2017 decision from New York’s highest court (Burlington Ins. Co. v N.Y.C. Tr. Auth., 29 N.Y.3d 313 (2017)), the Court held this language meant that coverage applied only to injuries “proximately caused by the named insured.” As the Court explained, the language does not equate to “but for” causation, is not equivalent to “arising out of,” and requires more than a mere causal link to the injury.
The Court found the security guard’s injuries for which he sued Manhattan School were not caused by the acts or omissions of Protection Plus, the named insured, but rather were caused solely by the alleged negligence of Manhattan School, the additional insured. Thus, under the specific terms of Philadelphia Indemnity’s policy, insurance coverage was not available.