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Additional Insured Language On A Certificate Of Insurance Held Insufficient To Alter Policy Language & Create A Defense And Indemnification Obligation

February 3, 2012

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<p style="text-align: justify;">In<em> <a href="https://www.wcmlaw.com/wp-content/uploads/2021/12/Chipotle-Mexican-Grill-Inc.-v.-RLI-Ins..pdf">Chipotle Mexican Grill, Inc. v. RLI Ins.</a>,</em> 2021 N.Y. Slip Op 06604 (2d Dep’t, November 24, 2021), the New York Appellate Division, Second Department, recently addressed the issue of whether additional insured language in a Certificate of Insurance created a coverage obligation on the part of an insurer. In that case, Chipotle hired Piece Management, Inc. (“PMI”) to perform rodent prevention services at one of its restaurants. PMI provided a Certificate of Insurance naming Chipotle as an additional injured under its policy.</p>
<p style="text-align: justify;">The underlying plaintiff, an employee of PMI, was injured after falling from a ladder while performing the work. Chipotle sought defense and indemnification in the case as an additional insured under PMI’s policy, but the insurer denied coverage. Chipotle filed suit but the trial court held that PMI’s insurer was not obligated to defend and indemnify Chipotle in the underlying lawsuit.</p>
<p style="text-align: justify;">The Second Department affirmed, holding that the insurer was not obligated to defend or indemnify Chipotle since Chipotle was not an additional insured under the PMI policy. Although the court recognized that Chipotle was named an additional insured on the Certificate of Insurance provided by PMI and the policy contained an additional insured endorsement, that endorsement required that the primary insured (PMI) “agreed in writing in a contract or agreement that such person or organization be added as an additional insured” on the policy. Since Chipotle and PMI did not have a written agreement wherein PMI agreed to name Chipotle as an additional insured under PMI’s policy, the additional insured coverage in the policy was not triggered. The court added that the Certificate of Insurance was for informational purposes only, conferred no rights upon the holder, and “did not amend, alter, or extend the coverage afforded by the policy.”</p>
<p style="text-align: justify;">The takeaway from this case is that the understanding of the parties regarding risk transfer must be reduced to writing, particularly if an additional insured endorsement requires that to trigger coverage. PMI probably assumed that it’s insurer would cover Chipotle, but its failure to understand the policy requirements led to significant consequences for Chipotle and its insurers, and the likely loss of business by PMI.</p>
<p style="text-align: justify;">Please e-mail <a href="mailto:jdiffley@wcmlaw.com">John Diffley</a> with any questions.</p>

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