Court Criticizes the Insurer for Reading the Policy Incorrectly
Insurers are not charitable organizations. They are profit-making companies who will go all the way (and beyond in this case) in enforcing the restrictive covenants of their insurance policies.
You need to know what your policy says, and negotiate its terms so you have contract certainty.
In the case in point*, the City of New York was supposed to be protected as “Additional Insured” under the policies of the contractors working on a city facility. Following injuries on the job, the City went to assert their rights, and they were denied by Zurich Insurance Company, the insurer for one of the subcontractors.
New York was required to be designated as Additional Insured in the contract between the city and the general contractor. Zurich insisted the contract had to be direct between the city and the sub.
The court rejected Zurich’s argument as an “incorrectly cramped reading of the policy language.”
You were expecting the insurer to give the benefit of the doubt, perhaps? to go to the other party’s side in an ambiguity?
Don’t ever count on that. Make sure your policy (and related contract) language is as it should be in advance.
*Liberty Mutual Fire Ins. Co. v. Zurich American Ins. Co., No 14 Civ. 7568 (PAC) (S.D.N.Y. Feb 4, 2016)
Feb 23, 2016