Blanket AI Endorsement Triggered by Language Requiring Insurance for "Mutual Benefit" of Parties
In Kassis v. The Ohio Casualty Company, 2009 NY Slip Op 05207 (June 25, 2009), the New York Court of Appeals considered whether a provision in a lease agreement requiring insurance for the “mutual benefit” of landlord and tenant was sufficient to trigger coverage under the terms of a blanket additional insured endorsement extending coverage to “any person or organization whom [the named insured is] required to name as an additional insured on this policy under a written contract or agreement.” The Court answered in the affirmative.
Under the terms of a lease, the insured tenant was obligated to pay for snow removal services and to “indemnify, defend, and hold harmless Landlord from any and all damages, costs, expenses, and liabilities for anything arising out of the occupancy of the Premises caused by Tenant or its agents and from any loss or damage arising out of the acts of Tenant or its agents or the failure of Tenant to comply with the terms and conditions” of the lease. The lease also required that the tenant, “at its sole cost and expense and for the mutual benefit of Landlord and Tenant, shall maintain a general liability policy . . . providing coverage against claims for bodily injury, personal injury and property damage.”
The tenant obtained a CGL policy from Ohio Casualty, which provided coverage where “the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement.” The policy also included a blanket additional insured endorsement extending coverage to “any person or organization whom [the named insured is] required to name as an additional insured on this policy under a written contract or agreement.”
The tenant’s employee was injured when he slipped and fell on ice and snow. The claimant sued the landlord for damages, and the landlord tendered the claim to Ohio Casualty for defense and indemnification. Ohio Casualty denied coverage for the claim. At issue was whether the additional insured endorsement extended coverage to the landlord, such that Ohio Casualty was required to defend and indemnify the landlord in the underlying personal injury action.
The Court concluded the landlord did qualify as additional insured under the endorsement. The insurance procurement language in the lease did not use the term “additional insured”; however, the Court focused on whether the lease required the tenant to “ensure that [landlord] received general liability insurance coverage equivalent to the coverage [tenant] enjoyed.” Here, the lease obligated the tenant to obtain coverage for “claims for bodily injury, personal injury and property damage, at its sole cost and expense and for the mutual benefit of [landlord] and [tenant].” “The natural and intended meaning of the term ‘mutual benefit’ as used in this provision,” reasoned the Court, “is that [landlord] and [tenant] are intended to enjoy the same level of coverage,” an intent and meaning reinforced by other insurance language in the lease expressly noting where disparities in the coverage were contemplated. Since the term “additional insured” is well-understood to mean an entity enjoying the same protection as the named insured, the Court concluded that the landlord qualified as such under the policy.
