Court Affirms Duty to Defend Additional Insured Contractor

    The appellate court affirmed the lower court’s ruling that the insurer must defend. Main St. Am. Assurance Co. v. Merchants Mut. Ins. Co., 2022 N.Y. App. Div. LEXIS 5507 (N.Y. App. Div., Oct. 7, 2022). 

    XL Construction Services, LLC was the contractor on a construction project. Timothy J. O’Connor was insured when performing drywall finishing as a self-employee subcontractor on the project. As part of a written indemnification and insurance agreement between the parties, O’Connor was obligated to obtain insurance for the benefit of XL Construction. O’Connor was insured by Merchants Mutual Insurance Company under a policy containing an additional insureds endorsement that provided coverage to a party where required by a written agreement, but “only with respect to liability for ‘bodily injury’ . . . caused in whole or in part, by . . . [O’Connor’s] acts or omissions.”

    The trial court found there was a duty to defend and entered judgment that Merchants Mutual was obligated to provided a defense to XL Construction.

    On appeal, Merchants Mutual relied upon the endorsement language restricting coverage for an additional insured only when “there was injury proximately caused by the named insured.” The underlying complaint sought damages for violations of the state labor law. Nonetheless, there could be more than one proximate cause of an injry. The underlying complaint suggested a reasonable possibility that O’Connor’s own negligence was a proximate cause of his injuries. The fact that the underlying complaint alleged labor law violations on the part of XL Construction and not negligence by O’Connor himself, was of no consequence because the allegations in the complaint brought the claim potentially within the policy provisions and triggered a duty to defend XL Construction as an additional insured.

    Therefore, the judgemt was affirmed.