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Great Northern Ins. Co. v. Mount Vernon Fire Insurance Company, 99 N.Y. Int. 0009 (Feb. 16, 1999).

INSURANCE - PRIMARY, EXCESS COVERAGE - COMMERCIAL GENERAL LIABILITY (CGL) POLICIES


ISSUE & DISPOSITION

Issue

Whether the phrase "similar coverage for 'your work"' in the excess coverage provision of the "other insurance" clause in this standard Commercial General Liability (CGL) policy refers to first-party property coverage, and not third-party liability coverage.

Disposition

Yes. The statement where the phrase "similar coverage for 'your work'" is located refers to assigning excess coverage to Fire, Extended Coverage, Builder's Risk, and Installation Risk, all categories which pertain to first-party property coverage. Similarly, the last category of "similar coverage for 'your work'" refers to first-party property coverage as well. Thus, the excess coverage provision applies only to first-party property coverage, and not third-party liability coverage.

SUMMARY

The New York Court of Appeals, answering the certified question from the U.S. Court of Appeals for the Second Circuit regarding the correct interpretation of the phrase "similar coverage for 'your work,'" ruled that the phrase refers to first-party coverage. A carpenter renovating Plaintiff Selby's apartment was injured on-site. The carpenter was working on behalf of Monier, who in contracting with Selby, agreed to indemnify her from any personal injuries or property damage arising from the construction work. Monier had a CGL policy from Mount Vernon; Selby had a standard homeowner's policy from Great Northern. Both policies covered the subject loss; however, the parties disagreed how to apportion the loss, specifically disputing whether Mount Vernon's coverage was primary or excess. The New York Court of Appeals held that the disputed phrase in the excess coverage provision, "similar coverage for 'your work,'" referred to first-party property coverage, and not third-party liability coverage. The Court's rationale was based on the phrase's surrounding context, which assigns excess coverage to categories of first-party property coverage such as Fire, Extended Coverage, Builder's Risk, and Installation Risk. "Similar coverage for 'your work,'" being within that statement, should be interpreted as assigning excess coverage only to first-party property coverage also. Since the carpenter was a third-party claimant, his claim did not fall within Mount Vernon's excess coverage provision, and therefore Mount Vernon was to provide primary coverage for the carpenter's injury.


Prepared by the liibulletin-ny Editorial Board.