New York Appellate Court Continues Expansive Interpretation of Additional Insured Endorsement

A New York Appellate Court recently reinforced a trend in New York to provide coverage to additional insureds under the standard Additional Insured Endorsement. In Burlington Ins. Co. v. NYC Transit Auth., the court held that the standard AI Endorsement provides additional insured coverage where there is a causal link between the named insured’s conduct and the injury, regardless of whether the named insured was negligent or otherwise at fault for causing the accident. This decision follows holdings in other cases over the past several years that broadly construed the AI Endorsement to provide coverage even when the named insured is not at fault.

In this case, the AI Endorsement provided coverage to additional insureds “only with respect to liability for bodily injury…caused, in whole or in part, by [the named insured’s] acts or omissions…[i]n the performance of [the named insured’s] ongoing operations[.]” The NYC Transit Authority (“NYCTA”) retained the services of Breaking Solutions for excavation work in a subway tunnel. Breaking Solutions added NYCTA, The Metropolitan Transit Authority (“MTA”) and the City of New York as additional insureds under a policy issued to Breaking Solutions by Burlington Insurance Company.

After an NYCTA employee was injured during an explosion, litigation ensued against all parties. The additional insureds tendered their defense of the claim to Burlington, who initially accepted pursuant to a reservation of rights.

During discovery, it became clear that Breaking Solutions was not at fault for the explosion that injured the NYCTA worker. While Breaking Solutions did unearth the electrical cable that created the explosion, it was not negligent because NYCTA was responsible for identifying and marking the cable, which it failed to do. Based on this fact, Burlington disclaimed coverage to the additional insureds because there was no evidence that the explosion was caused by the negligence of fault of the named insured. Burlington took the position that the language of the AI Endorsement required the named insured to be negligent in order for the additional insured coverage to be triggered.

Reviewing three decisions in the past three years, the court recognized that those cases interpreted the language of the AI Endorsement to provide coverage to additional insureds for losses “caused by” the named insured’s acts or omissions regardless of whether the named insured’s causal conduct was negligent. Those decisions focused on the fact that the AI Endorsement spoke only in terms of the named insured’s acts or omissions as a trigger to coverage and made no mention of a requirement that the named insured’s conduct be negligent.

Applying these precedents, the court found that the named insured’s act in unearthing the cable that caused the explosion was sufficient to trigger coverage under AI Endorsement for the additional insured. The court rejected Burlington’s argument that negligence was a requirement to trigger coverage because the intention of the drafters of the endorsement was to limit coverage only to liability arising from the fault of the named insured. The court noted that the AI Endorsement did not include any reference to fault or negligence and that it could only construe the actual language used, and not the subjective intentions of the drafters of the endorsement.