Insurance coverage follows indemnity according to appellate court

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.

Tompkins McGuire frequently advises insurers and TPAs on indemnity issues and related insurance coverage concerns. For more information, please contact Joseph Cobuzio, Esq.

Greg Lois is the managing partner of LOIS LLC and dedicates his practice to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016-2019 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or