Pecker Iron Works, Inc. v. Travelers Ins. Co., 99 N.Y.2d 391 (2003)
Unless unambiguously stated otherwise in a written agreement, an entity designated as an “additional insured” under an insurance policy is presumed to receive primary, not excess, coverage.
Summary
This case addresses whether an insurance policy extended primary or excess coverage to an additional insured. Pecker Iron Works, a general contractor, was named as an additional insured under a subcontractor’s (Upfront Enterprises) policy with Travelers Insurance. An Upfront employee was injured, leading to a lawsuit where Pecker sought a declaration that Travelers provided primary coverage. The Court of Appeals held that, absent explicit language in the agreement between Pecker and Upfront specifying excess coverage only, Pecker was entitled to primary coverage under the Travelers policy as an additional insured. The court reasoned that the default understanding of “additional insured” status is the same protection as the named insured, which includes primary coverage.
Facts
Pecker Iron Works engaged Upfront Enterprises as a subcontractor for a construction project. The subcontract required Upfront to provide certificates of insurance naming Pecker as an additional insured. Upfront had a primary insurance policy with Travelers Insurance Company. An Upfront employee was injured at the construction site and sued the general contractor and property owner, who then impleaded Pecker. Pecker sought a declaratory judgment that Travelers was obligated to provide primary coverage.
Procedural History
The Supreme Court granted Travelers’ motion to dismiss, concluding the policy provided only excess coverage absent an express designation of primary coverage in writing. The Appellate Division reversed, holding there was no indication in the Pecker-Upfront agreement that Pecker would receive only excess coverage. The Court of Appeals affirmed the Appellate Division.
Issue(s)
- Whether an entity named as an “additional insured” under an insurance policy is entitled to primary coverage, absent a clear and unambiguous written agreement specifying only excess coverage.
Holding
1. Yes, because the well-understood meaning of “additional insured” is an entity enjoying the same protection as the named insured, and absent an explicit written agreement to the contrary, this includes primary coverage.
Court’s Reasoning
The Court of Appeals emphasized the established understanding of the term “additional insured.” The court cited Del Bello v General Acc. Ins. Co., 185 AD2d 691, 692 (1992), stating that the term has a “well-understood meaning” as “an ‘entity enjoying the same protection as the named insured.’” The court determined that when Pecker engaged Upfront and required to be named as an additional insured, it signified that Upfront’s carrier would provide Pecker with primary coverage for the relevant risk. The Travelers policy covered additional insureds, as long as Upfront had contracted in writing for the insurance to apply on a primary basis. Upfront’s agreement to name Pecker as an additional insured satisfied this requirement, because there was no explicit agreement that coverage would be excess only. The Court therefore resolved the ambiguity in favor of primary coverage, stating that “[w]hen Upfront agreed to it, the policy provision was satisfied.” The court essentially placed the burden on the insurer to clearly specify excess-only coverage for additional insureds in the written agreement to avoid the presumption of primary coverage.