In Hermitage Ins. Co. v. Skyview & Construction Corp., et al., 137 A. D. 3d 712 (1st Dept. 2016), the New York appellate court again reaffirmed the numerous pitfalls that attend the process of trying to obtain additional insured coverage for construction and renovation projects in New York. This case involves all of the usual suspects, a property owner, a general contractor, a subcontractor and one or more provisions of the ubiquitous New York Labor Law, Section 200 et seq.
The plaintiff was an employee of a framing subcontractor who was injured “outside the premises when a steel metal rolling gate fell on him.” Unfortunately, there were no written agreements between or among the parties that required the subcontractor, the plaintiff’s employer, to provide additional insured coverage to the owner and general contractor. This shortcoming had a domino effect on the insurance issues.
First, the commercial general liability (CGL) insurer for the owner and general contractor successfully disclaimed coverage because of an exclusion “for injuries arising from the work of independent contractors or subcontractors on the premises unless the contractors or subcontractors specifically agreed to make [them] additional insureds on their own policies.” Without an agreement from the subcontractor to provide additional insured coverage, the disclaimer of coverage by the CGL insurer for the owner and general contractor was upheld. To make matters worse, the general contractor’s policy limited its coverage to specific types of interior work, presumably under some kind of classification limitation endorsement. Because the accident occurred outside, that was another basis for disclaimer.
The subcontractor’s CGL policy, on the other hand, provided additional insured coverage, but only to the extent that the subcontractor agreed in writing to provide additional insured coverage. Again, the absence of a written agreement to provide additional insured coverage precluded the owner and general contractor from obtaining coverage under the subcontractor’s policy. Just for good measure, the court also held, without explanation, that disclaimers by the insurers for late notice were also valid. As a consequence of the court’s decision, both the owner and the general contractor were essentially naked with regard to the plaintiff’s labor law claims.
Tressler Comments
New York continues to be the only state in the country that imposes strict liability, without actual fault, on owners of property for injuries sustained by employees of independent contractors arising out of the various hazards specific to the work the independent contractor was hired to perform. As this case aptly demonstrates, this strict liability scenario is confounded by the sometimes unfathomable obstacles to owners trying to transfer the risk of liability for injuries to workers who are employed by the contractors they hire.
Whether based on the failure to obtain additional insured coverage from a subcontractor, a classification limitation endorsement, or an exclusion for injuries to an employee of any contractor or subcontractor, New York courts almost uniformly uphold disclaimers. It is certainly good news that New York courts interpret policy language in accordance with its plain meaning. At the same time, it is ironic that a state that imposes the singular kind of strict liability without fault on blameless property owners inherent in the labor law, makes it so difficult for owners to transfer the risk of liability for construction-related accidents to the responsible parties.