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Close Only Counts in Horseshoes, Hand Grenades, and the Duty to Defend (NY)

November 21, 2018

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In New York, it is well-settled an insurer’s duty to defend arises whenever the allegations in a complaint are even potentially within the language of the insurance policy. The duty to indemnify is narrower, as even where there is a duty to defend, there may still be an issue of fact as to whether the underlying occurrence was within the scope of coverage. The Second Department recently reiterated how broadly Courts will interpret the scope of these obligations.

In <a href="">One Reason Rd., LLC v. Seneca Ins. Co., Inc.</a>, a landlord sought coverage from Seneca as an additional insured under a tenant’s policy for an underlying personal injury action. Seneca argued the policy did not cover the claim because the alleged accident did not occur on the portion of the property which had been leased to the tenant and the policy only applied to liability arising out of ownership, maintenance or use of “that part of the premises.”

However, the Court held Seneca owed the landlord both a duty to defend and indemnification. Although the alleged injury was a slip and fall on snow and ice in the parking lot, the Court observed the tenant had leased a portion of the warehouse and parking lot and “any necessary easements, privileges or rights of way over the adjoining premises.” Taken together with the tenant’s obligations to contribute to the maintenance of common areas and the extremely broad interpretation of the phrase “arising out of,” the Court held the accident occurred on a portion of the property which was part of the tenant’s lease.

The ruling is a salutary reminder that courts can be creative in finding coverage even when an insurer believes they have limited the coverage grant in their policies.

Thanks to Nicholas Schaefer for his contribution to this post. Please email <a href="">Vito A. Pinto</a> with any questions.

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