Mere Allegations of Negligence by Named Insured, Even Without Evidence of Such Negligence, Trigger Duty to Defend Additional Insured

by Steven J. Fried

New York courts have addressed the common question as to whether allegations of negligence against a named insured, without any evidence of such negligence, are sufficient to trigger a duty to defend an additional insured where the additional insured endorsement in question requires that the named insured’s negligence caused or contributed to the subject accident.  The answer is that under New York law, mere allegations of negligence can trigger a duty to defend an additional insured, even where the additional insured itself makes the allegations against the named insured.

Under New York law, in order to create an obligation on the part of an insurer to defend a putative additional insured under an endorsement that provides additional insured coverage only for claims arising out of, caused by, or related to the named insured’s negligence, there does not need to be proof or evidence of the named insured’s negligence to trigger the defense obligation. An allegation that the named insured was negligent, even when contained in a third party suit filed by the putative additional insured, is enough to trigger the insurer’s duty to defend the additional insured. See Axis Construction Corp. v. Travelers Indemnity Co. of America, et. al., 2021 U.S.Dist. LEXIS 166083 (E.D.N.Y. 2021), All State Interior Demolition, Inc. v. Scottsdale, Ins. Co., 168 A.D.3d 612 (1st Dept. 2019), City of N.Y. v. Evanston Ins. Co., 39 A.D.3d 153 (2nd Dept. 2007).

For example, in Axis, Travelers argued that its named insured endorsement conditioned coverage for a putative additional insured “to the extent…injury or damage is caused by the acts or omissions” of the named insured, and that there was no obligation to defend the additional insured because there was no evidence demonstrating that the loss arose out its named insured’s work and, in fact, there was evidence indicating that the loss arose out of work that was outside the scope of its named insured’s work.

The court rejected Travelers’ contention and held that Travelers “unquestionably has a duty to defend” the putative additional insured because of allegations of negligence against the named insured contained in a third-party lawsuit by that additional insured against Travelers’ named insured. Travelers raised the argument that a third-party complaint by the putative additional insured is a “self-serving third party complaint” and was “insufficient to trigger Traveler’s duty to defend”, but the Court disagreed, specifically holding that the putative additional insured’s third party complaint was sufficient to trigger Travelers’ duty to defend the putative additional insured.