New York's highest court recently considered whether, within the context of a CGL policy, liability must be determined before an additional named insured is entitled to a defense in an underlying personal injury action. Affirming the decision below, the New York Court of Appeals held that additional insured coverage is not contingent upon a liability finding, and that the obligation of an insurer to provide a defense to an additional named insured under the policy exists "to the same extent as it does to a named insured." The law in New York governing the trigger of the duty to defend for parties covered pursuant to additional insured endorsements was not entirely clear prior to this decision. This decision, a full copy of which is available here, clarifies the issue and is in favor of coverage for additional insureds.
The intermediate appellate court below had held that an additional insured under a CGL policy is entitled to a defense even in an action in which it is uncertain whether any eventual judgment against the additional insured will be within the scope of the coverage. See BP Air Conditioning Corp. v. One Beacon Insurance Group, 2006 WL 1843350 (N.Y. App. Ct. July 6, 2006). There was a strong dissent, however, asserting that it is a "condition precedent" to an insurer's duty to defend an additional insured that a court have rendered findings of facts establishing the additional insured's entitlement to indemnification (it was undisputed that issues of fact existed regarding liability in the underlying personal injury suit). The insurer appealed.