M. Claire Juliana J.D
Additional insured endorsements are a routine request for policyholders having to satisfy contractual obligations to their clients and other parties. But, there is a seemingly limitless variety of endorsements and an equally impressive amount of case law out there interpreting these various additional insured provisions – quite often with unexpectedly expansive results (from the perspective of the party extending such coverage whether it be the insured or its insurer).
Take, for example, a recent case from the New Jersey Appellate Division. In Marshall v. Raritan Valley Disposal, 2012 N.J. Super. Unpub. LEXIS 544 (3/13/2012), the court was confronted with a dispute between two insurance companies concerning their respective monetary contributions, if any, towards the settlement of a personal injury lawsuit. The underlying lawsuit involved a tragic and fatal accident involving a garbage truck. The town of West Amwell (the “Town”) had contracted with Raritan Valley Disposal (“RVD”) to place a garbage truck on a site one day a week for residents to empty their garbage. The contract only required that RVD bring the truck to the site, park it where told by a municipal employee and then remove it at the end of the day. Additionally, for purposes of the dispute herein, the contract required that RVD add the Town as an additional insured under the policy as well as to indemnify and hold it harmless from and against, among other things, claims resulting directly or indirectly from the performance of the contract.
On May 12, 2001, a resident backed his pickup truck pinning another resident against the stationary truck causing her fatal injuries. Her estate sued the Town for its failure to maintain the premises in a safe condition and failure to warn of unsafe and dangerous conditions at the facility. The Town’s general liability insurer undertook the defense of the suit and also filed a third party complaint against RVD’s insurer seeking coverage under the additional insured endorsement to its Business Auto policy.
Endorsement #10 to that policy defined “insured” as follows:
- WHO IS AN INSURED
A. The “Named Insured” for any covered “Auto” and
B. At the option of the Named Insured, any entity or individual prior to or after an “Accident” for any
The lower court held that the Town was an insured pursuant to the terms of RVD’s policy. The court found the provision to be “not ambiguous” but even if it were, the court concluded that the contract required RVD to obtain primary additional insured coverage for the Town. The court added that the Town was specifically insured for the accident because it resulted from the use of the garbage truck.
The matter was appealed and the New Jersey Appellate Division affirmed the lower court’s finding of coverage for the Town under the RVD policy. The court rejected RVD’s insurer’s argument that the terms of the waste collection contract were intended to limit the scope of the Town’s status by excluding liability coverage for the Town’s own negligence. The court found the endorsement on its face to be unambiguous – the Named Insured could (and did) designate any entity “without regard to a reason”. Because the language of the endorsement was plain and unambiguous on its face, the court did not need to resort to review of any extrinsic information (such as the underlying contract) to distill its meaning. That said, the court did look at these collateral documents and found no support for the claimed limitation regarding negligence. The court also addressed the carrier’s argument that the accident did not “result from the use of the garbage truck” as to implicate the auto policy. The court quickly dispatched with that argument finding that the activities at the Town facility involved the proper use of the garbage truck within the reasonable intendment of all concerned. The victim had been using the truck to dispose of trash; the Town was using the truck as a means of affording a public service to its residents; and the truck was used to fulfill the Town’s provision of such services. The court was therefore satisfied that the policy’s employment of the word use “fully embraced the circumstances of this tragic accident”.
Maybe the court’s conclusion was one you would expect or maybe not. But at the very least, this case, like those preceding and (likely) succeeding it should serve as a reminder that while these endorsements can be an effective risk management tool, policyholders and their advisors should make sure that the wording of the additional insured endorsement is reviewed carefully and clearly articulates the parties’ expectations and obligations.
About the Author
M. Claire Juliana J.D. is Director – Environmental Claims; Aon Risk Solutions; Specialty- Environmental; 199 Water St., 8th Floor, New York, NY 10038; Telephone: 212.441.2392;
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