A federal court in Florida recently found that the phrase “arising out of” in an additional insured endorsement did not apply only to an additional insured’s vicarious liability for an insured’s negligent acts and that a lessee’s insurer had a duty to defend and indemnify a lessor of leased premises as an additional insured against a claim that arose out of the lessor’s use of the leased premises. Diocese of St. Petersburg, Inc. v. Arch Ins. Co., 2016 WL 2991226 (M.D. Fla. May 24, 2016).

A lease required the lessee to acquire general liability insurance and to name the lessor as an additional insured under the policy. Both the lessor and lessee were sued as a result of an injury sustained on the leased premises as a result of water emanating from a sewer system. The lessor filed a declaratory judgment action against the lessee’s insurer seeking a declaration that the lessee’s insurer had a duty to defend and indemnify it as an additional insured. The lessor moved for summary judgment, arguing that it was an additional insured as the underlying lawsuit was for a “liability arising out of the ownership, maintenance, or use of” the leased premises.

The district court granted the lessor’s motion for summary judgment, finding that the damage arose out of the lessor’s use of the leased premises and the lessor therefore qualified as an additional insured under the policy. The district court rejected the argument that the additional insured endorsement was intended to cover only the lessor’s vicarious liability. The district court entered judgment in favor of the lessor declaring that the lessee’s insurer had a duty to defend and indemnify.