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An Obligation To Procure Commercial General Liability Insurance Is Not Waived Unless Waiver Is Clear, Unequivocal And Deliberate (NY)

April 8, 2022

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<p style="text-align: justify;">Where a party has a contractual obligation to procure a certain amount of commercial general liability insurance coverage, does the acceptance of a certificate of insurance constitute as a waiver of the insurance procurement provision if the party failed to procure the agreed-upon amount of coverage? According to the Appellate Division, First Department, the answer is no.</p>
<p style="text-align: justify;">In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2022/04/Benedetto-v.-Hyatt-Corporation.pdf">Benedetto v. Hyatt Corporation</a>,</em> 2022 WL 773978 (1<sup>st</sup> Dep’t 2022), a security guard was injured and brought a personal injury action against a hotel (“Plaintiff-Respondent”). Subsequently, Plaintiff-Respondent brought a third-party breach of contract claim against the security guard’s employer (“Defendant-Appellant”). The subject contract required Defendant-Appellant to acquire $3 million worth of commercial general liability insurance coverage. However, instead of procuring $3 million worth of commercial general liability insurance coverage, Defendant-Appellant obtained $2 million worth of commercial general liability insurance coverage and $1 million worth of umbrella liability coverage. As such, Plaintiff-Respondent moved for summary judgment for breach of contract. The Supreme Court, County of New York granted Plaintiff-Respondent’s summary judgment motion and Defendant-Appellant appealed.</p>
<p style="text-align: justify;">During the appeal, Defendant-Appellant argued that Plaintiff-Respondent waived the insurance procurement provision in the subject contract because Plaintiff-Respondent accepted Defendant-Appellant’s certificates of insurance even though the certificates did not reflect the agreed-upon $3 million worth of commercial general liability insurance coverage. However, the First Department noted that, by definition, a waiver is the intentional relinquishment of a known right, and a waiver must be clear, unequivocal and deliberate. Accordingly, the First Department held that Defendant-Appellant failed to raise an issue of fact because Plaintiff-Respondent’s acceptance of the certificates of insurance merely constituted “mere silence” or, at most, “mistake, negligence or thoughtlessness,” but never amounted to any intentional act to relinquish a known right. Therefore, Supreme Court’s decision was affirmed as Plaintiff-Respondent did not waive the insurance procurement provision in the subject contract.</p>
<p style="text-align: justify;">Thanks to Drew Fryhoff for his contribution to this article.  Should you wish to discuss, please feel free to contact <a href="mailto:tbracken@wcmlaw.com">Tom Bracken</a>.</p>

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