Construction owners often require their contractors to name the owner as an additional insured on the contractor’s insurance policy.  But what happens when the owner requires the contractor to name the owner’s construction manager as an additional insured as well?  A recent decision from the Court of Appeals of New York held that the contractor’s insurance policy did not provide additional insured coverage for the owner’s construction manager.  See Gilbane Bldg. Co./TDX Constr. Corp. v. St. Paul Fire & Marine Ins. Co., 31 N.Y.3d 131 (2018).

In Gilbane, the owner’s contract with the general contractor required the general contractor to name as an additional insured both the owner and the owner’s construction manager.  However, the general contractor’s insurance policy only provided additional insurance coverage for entities with whom the general contractor had a contract.  The Gilbane court rejected the argument for additional insured coverage because the general contractor did not have a contract with the construction manager; the construction manager only had a contract with the owner.  The lack of coverage leaves the general contractor susceptible to a claim for failing to obtain an appropriate insurance policy that named the construction manager as an additional insured.

This case is a reminder for construction owners, construction managers, and contractors to review the explicit terms of insurance policies to ensure that additional insured coverage is obtained as required by a contract.