In a June 26, 2008 opinion from the Appellate Division in the case of Metta v. American Empire Surplus Lines Ins. Co., the court again affirmed the principle that insurance coverage follows indemnity. Often times, parties seeking additional insured status take the position that when a party is added to another’s CGL policy, they are entitled to the same coverages as the primary insured, without respect to the circumstances underlying a given loss. To the contrary, the court in Metta held that under the pertinent contract, the insured was to indemnify the additional insured only for the insured’s negligence. Thus the court held that since those damages, if any, had not been determined, final resolution had to abide the outcome of the underlying B/I case.
It is important to remember this point of law in determining whether to accept an adversary’s tender demand. Very rarely will it be that one party has agreed to indemnify another for the latter’s negligence. Thus, the Metta court would advise that an additional insured should only be provided coverage where the primary insured is found negligent. However, all too many times, especially in the case of snow removal contracts and the like, tender demands are accepted prematurely and it is ultimately found that the contractor was not negligent. The carrier is then left to pay the judgment against an entity it does not insure.