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Appellate Division weighs in on Commercial Premises Liability Coverage Issues

The facts of Campbell were founded on two slip-and-fall accidents in the parking lot of a surgery center. Under its lease, the surgery center agreed to name the landlord as an additional insured on its general liability policy, which it did. Under the lease, the landlord was required to maintain the parking lot, including snow removal. It was undisputed that the plaintiffs were both patients of the surgery center and were injured due to slipping on ice in the parking lot.

The Appellate Division reviewed four of its prior published opinions in this area, in an effort to determine whether the surgery center’s carrier was obligated to defend and indemnify the landlord. Ultimately, the court found that the plaintiffs’ activities “arose out of” the surgery center’s use of the premises, thereby bringing the landlord within the center’s policy. Quite frankly, this was not a surprising result, given the court’s prior decisions. However, the court went on review the two policy types and determined that the center’s insurance policy was not a “true” excess policy, but rather a “primary insurance policy with an excess insurance clause.” The court then examined the the “other insurance” clauses of both policies The tenant’s policy, issued by Lexington Insurance company, mandated that if other insurance applied to the loss, the other insurance must pay first. Thus, according to its terms, the tenant’s Lexington policy only provided excess coverage to additional insureds. An examination of the language of the landlord’s own Maryland Casualty policy revealed that it was to be excess over any other primary insurance providing coverage for damages arising out of premises for which the insured had been added as an additional insured. The Campbell court concluded that since by its terms the tenant’s policy only afforded the landlord excess coverage, there was no other primary insurance available. Therefore, the condition limiting the coverage of the landlord’s own policy was not met and that policy must provide primary coverage.

WHY IS THIS IMPORTANT? This decision can be viewed as a significant roadblock at efforts to tender landlord’s defenses to tenants and their insurers for fall-downs which arise out of a tenant’s use of the premises. We would be happy to discuss the facts of your particular case as they might be affected by this new decision.

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