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Clear and Unambiguous AI Endorsement Trumps Lease Language (NJ)

May 5, 2017

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In <em><a href="">Killeen v. J&amp;M</a></em>, plaintiff, a firefighter, was injured while responding to a fire after falling through a glass panel on the roof. He filed a complaint against defendant NSPC, Inc., the owner of the building, and Jenson &amp; Mitchell, Inc. (J&amp;M), the tenant of the property. The lease  required J&amp;M to obtain general liability insurance, naming NSPC as an additional insured against liability on the premises. J&amp;M procured insurance through Travelers Property Casualty Company of America (Travelers), and an additional insured endorsement provision provided coverage to NSPC for “liability arising out of the ownership, maintenance or use” of the premises leased by J&amp;M, but Travelers disclaimed coverage as to NSPC because the lease itself required NPSC to maintain the roof.  NSPC to filed third-party complaint against Travelers seeking coverage.
NSPC moved for summary judgment, seeking an order declaring that Travelers owed coverage under the policy, or, in the alternative, a ruling that J&amp;M breached the lease by failing to procure insurance coverage. Travelers filed a cross-motion for summary judgment, seeking an order that NSPC was not entitled to coverage under the insurance policy. The motion court  granted Travelers’ motion, dismissing the third-party complaint against Travelers, because the lease obligated NSPC to maintain the roof.  Therefore, no coverage for NSPC.
Pursuant to an assignment of NSPC's rights, plaintiff appealed the finding of summary judgment in favor of Travelers.  The appellate court reversed, since the additional insured endorsement under the Travelers policy provided NSPC coverage “with respect to liability arising out of the ownership, maintenance or use of that part of any premises leased to J&amp;M.” The appellate court opined that the roof was a vital part of the “premises” leased to J&amp;M, and the insurance policy was clear and unambiguous.  As such, there was no need to look to the lease to determine coverage.
Had the AI endorsement been vague, then the Court may have looked to the lease provision, and ruled differently.  But the clear policy language rendered the lease moot. Thanks to Steve Kim for his contribution to this post.  Please email <a href="">Brian Gibbons</a> with any questions.

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