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Additional insurance insurance requires the insurer to pay co-insurers



Starr Indemnity & Liability Company ("Starr") sued and sought a declaratory judgment that the defendant Excelsior Insurance Company ("Excelsior") is liable to indemnify the parties to an underlying personal injury penalty ("Underlying Action"). Starr claims that the parties are "further insured" under policies issued by Excelsior to a non-party, and is now seeking compensation for 50% of the compensation payments they incurred in the underlying action. In Starr Indemnity & Liability Company v. Excelsior Insurance Company 19 Civ. 3747 (KPF), United States District Court Southern District Of New York (February 1, 2021) the USDC resolved the dispute by applying the contracts as written [19659003] BACKGROUND

In April 2015, Kenneth Jacobsen initiated the underlying action by suing JPMorgan Chase & Co. (“JPMorgan”) owns premises at Metrotech Center 4 in Brooklyn, New York (“Jobsite”). JPMorgan retained Americon Construction, Inc. (“Americon”) to serve as the main contractor for a construction project on Jobsite. Americon continued to employ National Acoustics, Inc. ("National Acoustics") as the project's subcontractor for drywall and roofing and Tri-State Computer Flooring Co., Inc. ("Tri-State") as the project's subcontractor for flooring.

Jacobsen, an employee at National Acoustics, was injured while performing work at Jobsite when his scaffolding tipped over. He suffered serious and permanent injuries without any fault of his own. Jacobsen's complaints are named JPMorgan, Americon and the New York City Industrial Development Agency as respondents (collectively referred to as "Underlying Defendants"). During the trial, the parties reached an agreement under which Jacobsen would receive $ 3,750,000.

Relevant contracts

According to their subcontracts with Americon, Tri-State and National Acoustics, it was necessary to obtain a primary and excessive insurance under which the underlying Defendants would be included as additional insured.

The contract between Tri-State and Americon

The dissolution of the cross proposals activated the text and the interplay between the provisions of the contracts between Tri-State and Americon and the contracts between Tri-State and Excelsior. To begin with, the Tri-State Agreement provided that Tri-State would purchase and maintain insurance policies that provided Americon and JPMorgan with certain protections, in particular protection for "[c] bodily injury" and "[c] personal injury damages. "Which may arise as a result of or results of operations, whether or not such operations or attempts at operation are to be carried out by [Tri-State] or by any of its subcontractors or agents or by any person directly or indirectly employed by any of them or by any other person for whose

In addition, the agreement provided that Americon's agreement with JPMorgan was "incorporated by reference" and that all entities that Americon was required to name as additional insured would be named and included as additional insured on Tri-State insurance.

The Excelsior policy contains a number of provisions that define "Additional insured."

In October 2015, wh While the underlying action was pending, the underlying defendants initiated a third-party action against the trestate and entity and sought compensation and grants (the "third-party action"), and the underlying defendants' claims were reviewed before a jury, which ruled that both Tri-State and the underlying defendants were negligent.When the jury was asked to share responsibility, it found that Tri-State was 35% liable for the accident and that the underlying defendants were 65% liable.

In accordance with the jury's decision, Starr agreed that pay 65% ​​of the settlement to Jacobsen under the agreement in the underlying measure.Excelsior agreed to pay the remaining 35% of the settlement fees, in accordance with the jury's determination regarding Tri-State negligence.Starr reclaimed half of what it paid in accordance with with the additional insured clauses in the insurances.

DISCUSSION

Interpretation of insurance contracts under New York law [1 9659007] Insurances are essentially the creatures of contracts and, consequently, subject to the principles of contract interpretation. The Court must interpret unambiguous contractual provisions in the light of their simple and ordinary meaning. The court must interpret such terms in the light of a joint speech and the reasonable expectations of a businessman.

Analysis

The Court takes into account the scope of Excelsior's obligations towards the underlying defendants under the Tri-State Agreement and Excelsior Policies, and whether such obligations are limited by the decision of the jury in the third party action.

Starr claimed compensation for 50% of the payment he made to Jacobsen on behalf of the underlying defendants. Excelsior, on the other hand, claimed that its liability was limited to the percentage of errors assigned to it by the jury in the third-party action.

The underlying defendants are additional insured who claim damages under the Tri-State Agreement and Policies

According to the various additional insured provisions in the agreement, Tri-State was required to maintain insurance that provided Americon and the underlying defendants in the event of of an accident like Jacobsens. And Tri-State continued to secure such coverage in its policies with Excelsior.

The Tri-State and Americons agreement provided the underlying defendants with several forms of personal injury protection. The agreement specified the order in which Tri-State coverage would apply to Americon, stating that it was "on a primary and non-contributory basis [.]"

Under the terms of the agreement, Tri-State and Americon expressly agreed to to transfer the risk of liability arising from accidents at Jobsite to Tri-State insurers. As such, Excelsior's assertion that Starr is now striving to "transfer the risk" to what Excelsior has wrongly characterized this risk since it issued policies that provided the broad coverage required by the three-state hose agreement.

The Agreement and the Policy Terms were unambiguous. there was no real dispute as to the substantive fact that the underlying defendants are further insured. While Excelsior has previously represented that the Tri-State policy was "in excess of all other insurances" for which the underlying defendants were further insured under the express terms of the agreement and policies, Excelsior had to act as the primary insurer for the Tri-State & # 39; 39; s additional

Excelsior is liable to injure the underlying defendants

On these summary assessment proposals, the question of damages is addressed if Jacobsen's claims fall within the further insured provisions in the policy. In other words, the question is whether the liability of the underlying defendants arises from damages either "arising from … [Tri-State’s] ongoing activities" or caused "in whole or in part by [Tri-State]."

Where Tri-State and Excelsior incorporated "wholly or partly" language into the policy, and Tri-State has been considered 35% negligent by a jury in the third-party action, it can rightly be said that the underlying defendants' liability was caused in part by Tri -State business.

Since Excelsior's liability was not limited to the jury's decision that it was 35% guilty of Jacobsen's accident, it has not fulfilled its obligations to the underlying defendants with its previous payment of 35% of Jacobsen's residence. As such, Excelsior remains responsible for replacing the underlying defendants in accordance with the additional policies insured in the policy.

Starr's request for a summary judgment was granted and Starr was entitled to recover 50% of the settlement payment made on behalf of the underlying defendants.

Construction contracts usually include risk transfer devices such as requiring all subcontractors to provide the main contractor and owner with additional insurance on a CGL policy and claiming damages through the construction contract. When the risk is transferred, the entire risk is transferred to the subcontractor or its insurer and cannot effectively argue that its claim for compensation is limited to the percentage of errors attributed to the said insured. In this case, the two insurance companies protected the insured and settled the underlying measure, applying their common arguments and then filing a declaratory relief measure to determine who was guilty of what and who.


© 2021 – Barry Zalma

Barry Zalma, Esq. , CFE, now limits its practice to serving as an insurance consultant specializing in insurance coverage, insurance management, infidelity and insurance fraud almost equally for insurers and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.

For the past 53 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims staff to become insurance claims staff.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Zalma on Twitter at https://twitter.com/bzalma ; Go to Barry Zalma videos on Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the library for insurance claims – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/ posts ; and Read the last two issues of ZIFL here.


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