‘Additional Insured" endorsements have been one of the most contested aspects of liability insurance in recent years, particularly with regard to construction defect claims. In New York, the priority of coverage afforded by additional insured endorsements in subcontractors’ excess policies vis-à-vis general contractors’ primary policies is often disputed. This article analyzes current New York law concerning the priority and allocation of coverage between a subcontractor’s excess policy and the primary coverage of its additional insured general contractor.
Until recently, New York law was clear that an allocation between a subcontractor’s excess policy and the primary coverage of its additional insured general contractor was determined without regard to the indemnification agreements in trade contracts. Instead, the courts compared the terms and intended purposes of each policy to ascertain the priority of coverage. Such priority of coverage determinations almost always resulted in horizontal exhaustion of the parties’ primary commercial general liability (CGL) policies prior to the triggering of excess or umbrella coverage.
