One commentator has called the scope of Additional Insured coverage “[o]ne of the oldest and most confounding debates in the insurance world.” Another chapter was written the other day in Pioneer Cent. Sch. Dist. v. Preferred Mut. Ins. Co., No. 1067, 2018 WL 4845825 (N.Y. App. Div. Oct. 5, 2018).  Carriers will read it with satisfaction; would-be Additional Insureds will find it a cautionary tale.

The case arose when Ms. Ayers, an employee of Kleanerz janitorial services, leaving Pioneer Middle school after completing her shift there, slipped and fell in the icy parking lot.  When she sued Pioneer, Pioneer turned with confidence to Kleanerz’s liability carrier, Preferred Mutual.  After all, Pioneer had had the foresight to insist that Kleanerz make Pioneer an Additional Insured under the Preferred Mutual policy.

Preferred, however, refused to defend, and the court ruled in Preferred’s favor.

What happened?  Why did Pioneer’s status as an Additional Insured prove to be worthless?

The Additional Insured endorsement extended only to bodily injury “caused, in whole or in part, by” the acts or omissions of Kleanerz, the Named Insured.  The Court, declaring that this language requires proximate cause, not merely but-for causation, rejected the argument “that Kleanerz caused the accident by instructing Ayers [the injured Kleanerz employee] to exit Pioneer Middle School through a door located near the area where Ayers subsequently slipped. . . .”  These instructions, the Court held, “merely furnished the occasion for the injury” by “fortuitously placing” Ayers in a location or position where a separate instance of negligence operated to harm her.

The lesson is, of course, what it has always been:  those who have the bargaining power to do so ought to insist on robust Additional Insured language.  And those who don’t ought to make sure their own coverage is adequate.

Learn more about Additional Insured Endorsement Cover