15 N.Y.3d 34 (2010)
An additional insured clause in a commercial general liability (CGL) policy, covering liability “arising out of” the named insured’s operations, applies when there is a causal relationship between the injury and the named insured’s work, regardless of whether the additional insured’s negligence contributed to the injury.
Summary
Regal Construction Corporation’s employee was injured at a renovation project managed by URS Corporation. Regal’s insurance policy with INSCORP named URS as an additional insured for liability “arising out of” Regal’s operations. The employee sued URS, who sought coverage from INSCORP. INSCORP initially accepted the defense but then filed a declaratory judgment action arguing URS wasn’t covered. The Court of Appeals held that URS was entitled to coverage because the injury was causally connected to Regal’s ongoing operations, despite URS’s alleged negligence. The focus is on the general nature of the operation, not the precise cause of the accident.
Facts
URS Corporation was the construction manager for a renovation at Rikers Island. URS hired Regal Construction Corporation as a prime contractor. The contract required Regal to obtain a CGL policy naming URS as an additional insured. Regal obtained a policy from INSCORP. Regal’s project manager, LeClair, was injured when he slipped on a painted floor joist while supervising demolition work. LeClair claimed a URS employee painted the joist.
Procedural History
LeClair sued URS in 2003. URS tendered its defense to Regal and INSCORP based on the additional insured clause. INSCORP initially accepted the defense but later filed a declaratory judgment action against URS and its insurer, National Union Fire Insurance Company, seeking a declaration that URS was not entitled to coverage. Supreme Court ruled in favor of URS. The Appellate Division affirmed. The New York Court of Appeals affirmed the Appellate Division’s order.
Issue(s)
Whether URS is entitled to coverage as an additional insured under Regal’s CGL policy with INSCORP, given that the injury to Regal’s employee occurred at a project managed by URS, and the policy covered liability “arising out of” Regal’s operations.
Holding
Yes, because the injury arose out of Regal’s operations notwithstanding URS’s alleged negligence, and fell within the scope of the additional insured clause of the insurance policy.
Court’s Reasoning
The Court emphasized the broad duty to defend. An insurer must defend if the complaint suggests a reasonable possibility of coverage. The phrase “arising out of” means originating from, incident to, or having a connection with. It requires only some causal relationship between the injury and the risk for which coverage is provided. Here, LeClair was injured while supervising demolition work. The court stated, “the focus of the inquiry is not on the precise cause of the accident but the general nature of the operation in the course of which the injury was sustained.” The Court distinguished this case from Worth Constr. Co., Inc. v Admiral Ins. Co., 10 NY3d 411 (2008), where the subcontractor had completed its work and was not on site when the injury occurred. In Worth, the staircase was merely the situs of the accident, lacking a connection to the subcontractor’s work. Here, there was a direct connection because the injury was sustained by Regal’s employee while supervising Regal’s subcontractor. The court stated, “That the underlying complaint alleges negligence on the part of URS and not Regal is of no consequence, as URS’s potential liability for LeClair’s injury ‘ar[ose] out of’ Regal’s operation”.