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(Article from Insurance Law Alert, June 2017)

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Reversing an appellate court decision, the New York Court of Appeals ruled that an additional insured provision applies only to injury proximately caused by the named insured and does not extend “broadly to any injury causally linked to the named insured.”  Burlington Ins. Co. v. NYC Transit Authority, 2017 WL 2427300 (N.Y. June 6, 2017).

The New York City Transit Authority (“NYCTA”) contracted with Breaking Solutions, Inc. (“BSI”) for tunnel excavation.  Pursuant to the contract, BSI obtained liability insurance from Burlington, listing NYCTA and the MTA as additional insureds.  When a NYCTA employee was injured during the course of work, NYCTA sought defense and indemnity from Burlington.  Discovery in the underlying personal injury suit revealed that the injury was caused solely by NYCTA’s negligence.  Thereafter, Burlington denied coverage, asserting that NYCTA and MTA were not additional insureds under the policy for the purposes of the injury at issue.  In ensuing litigation, a New York trial court granted Burlington’s summary judgment motion.  An intermediate appellate court reversed, ruling that additional insured coverage was available because there was a causal link between BSI’s conduct and the injury, even though BSI was not negligent or the proximate cause of injury.  The New York Court of Appeals reversed. 

The additional insured endorsement provides that the NYCTA and MTA are additional insureds “only with respect to liability . . . caused, in whole or in part, by: 1. Your acts or omissions; or 2. The acts or omissions of those acting on your behalf.”  The New York Court of Appeals ruled that this language requires BSI (the named insured) to be the proximate cause of the injury in order to trigger additional insured coverage.  The court rejected the argument that “caused, in whole or in part” means only but for causation, such that additional insured coverage is available so long as there is some causal link between the named insured’s conduct and the injury.  In so ruling, the court expressly rejected the appellate court’s finding that the phrase “caused by” does not materially differ from “arising out of.”