910 NYS 2d 548 (2d Dep’t, Nov 9, 2010)The case shows the importance of getting the requirement for being named an additional insured in writing.Empire, the construction manager, had a verbal understanding with Lecapife Corp., one of the subcontractors, that Lecapife would provide Empire with additional insurance naming the owner and Empire. As a result there was no written agreement requiring the additional insurance, and the insurance policy issued by Scottsdale Ins Co did not list either Empire or the owner as additional insureds.When a personal injury was commenced against the owner and Empire they sought to have Scottsdale defend and indemnify them, however Scottsdale denied the claim.
Scottsdale filed a motion for summary judgment for a declaration that the owner and Empire were not additional insureds under its policy. The trial court denied Scottsdale’s motion, but on appeal the decision was reversed in favor of Scottsdale.
Scottsdale’s policy contained the common “Blanket Additional Insured Endorsement” which defined an additional insured as “any person or organization whom you are required to add as an additional insured on this policy under a written contract, agreement or permit which must be … executed prior to the personal injury, property damage, ….”
The court ruled in favor of Scottsdale because even if the verbal understanding constituted an agreement to have the owner and Empire named as additional insureds, the further requirement that the agreement be “executed” prior to the loss was not satisfied “since the agreement was neither reflected in a signed document nor fully performed by the parties.”
In short, when it comes to a question as to whether someone is an additional insured, the courts will look closely at the requirements in the policy and enforce it exactly as written.
Verbal agreements have no place when it comes to creating additional insurance.