HNRK Coverage Corner

On October 5, 2018, the Fourth Department issued a decision in Pioneer Cent. Sch. Dist. v. Preferred Mut. Ins. Co., 2018 NY Slip Op 06682, holding that a school district was not entitled to coverage under a cleaning company’s CGL policy – either as an additional insured or as the named insured’s contractual indemnitee – because the underlying injuries were not proximately caused by the named insured.

In Pioneer Central, a school sought coverage under a cleaning company’s CGL policy for a personal injury action by an employee of the cleaning company who was injured “when she slipped on snow or ice in the parking lot of Pioneer Middle School after completing her shift.” 

The motion court granted summary judgment to the school, but the Fourth Department reversed, explaining:

We conclude that Pioneer is not an additional insured under the policy inasmuch as Ayers's injuries were not proximately caused by Kleanerz. The policy's additional insured endorsement provides that the injury must have been "caused, in whole or in part, by" Kleanerz's conduct, and thus it requires that the insured must have been a proximate cause of the injury, not merely a "but for" cause.  Here, it is undisputed that Kleanerz was not responsible for clearing ice and snow from the parking lot and that Ayers's fall resulted from her slipping on the ice or snow. Although Pioneer contends that Kleanerz caused the accident by instructing Ayers to exit Pioneer Middle School through a door located near the area where Ayers subsequently slipped, Kleanerz's instructions to Ayers merely furnished the occasion for the injury by fortuitously placing Ayers in a location or position in which an alleged separate instance of negligence acted independently upon her to produce harm, and were not a cause of the accident triggering the additional insured clause of the policy.

We further conclude that the indemnification provision in the janitorial services contract did not create coverage under the insurance policy. The insurance policy covers liability assumed in an "insured contract" between Kleanerz and a third party. An "insured contract" is defined in the policy as "[t]hat part of any other contract or agreement pertaining to [Kleanerz's] business . . . under which [Kleanerz] assume[s] the tort liability of another party to pay for bodily injury' . . . to a third person or organization, provided the bodily injury' . . . is caused, in whole or in part, by [Kleanerz] or by those acting on [Kleanerz's] behalf." Here, the injuries were not "caused, in whole or in part, by" Kleanerz's acts, and thus the indemnification provision of the janitorial services contract does not fall within the "insured contract" coverage provided by the insurance policy.

CGL policies sometimes provide coverage for parties other than the named insured.  One important example is the Additional Insured Endorsement, which has been the subject of numerous posts on this blog. CGL policies also often provide coverage for “insured contracts” – i.e., indemnification agreements under which the named insured assumes the tort liability of a third party.  As always, the scope of this coverage is defined by the policy.  Here, coverage for “insured contracts” only extended to claims “caused, in whole or in part” by the named insured.  Thus, there was no coverage, given the Court’s conclusion that the named insured did not proximately cause the injury.