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New York (Insurance Coverage) State of Mind (NY)

June 11, 2021

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<p style="text-align: justify;">In<em> <a href="">City of New York v. Fleet General Insurance Group Inc.</a></em>, the Eastern District of New York addressed the causal link required to trigger an insurer’s duty to defend an additional insured.</p>
<p style="text-align: justify;">This case arises out of a state-court lawsuit, filed against the City of New York, for millions of dollars in property damage, that allegedly occurred when a section of Northern Boulevard in Queens collapsed during a construction project. Specifically, ConEd filed a complaint in state court seeking to recover damages allegedly suffered due to the collapse. The lawsuit named the City and the general contractor, Perini, as defendants, among others. In turn, the City filed a lawsuit in federal court arguing that Perini’s insurer was required to defend the City in the state court action on an additional insured basis.</p>
<p style="text-align: justify;">By way of background, consistent with a City requirement, Perini had obtained an insurance policy that covered the City as an additional insured “only with respect to liability for ... ‘property damage’ ... caused, in whole or in part, by [Perini's] acts or omissions.”</p>
<p style="text-align: justify;">In determining whether the insurer had a duty to defend the City, the court concluded that since the additional insured endorsement required coverage for property damage “caused, in whole or in part, by” Perini's acts or omissions, the insurer was required to cover the City for property damage proximately caused by Perini. Thus, the court continued that since, fairly read, the ConEd lawsuit alleged that the City was liable for such damage, the court concluded the insurer’s additional insured duty to defend had been triggered.</p>
<p style="text-align: justify;">Accordingly, this case illustrates that New York courts will look to whether the insured’s actions were the proximate cause (not but-for cause) of the claimed damages, in determining whether an insurer’s additional insured obligations have been triggered.</p>
<p style="text-align: justify;">Thanks to PJ Benasillo his contribution to this post. If you have any questions or comments, please contact <a href="">Colleen Hayes</a>.</p>


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