In a brief opinion, a New York court found the insured contract provision ambiguous.  See Majawalla v. Utica First Ins. Co., 2010 N.Y. App. Div. LEXIS 2510 (N.Y. App. Div. March 23, 2010).

   Yashi Associates leased a store location to the insured.  The lease required the lessee to maintain liability insurance for the leased premises and to name the lessor as an additional insured.  The policy, however, failed to name Yashi Associates as additional insureds. 

  Janet Mangerino allegedly fell in the parking lot of the store, sustaining injuries.  After being sued by Mangerino, Yashi Associates demanded that Utica defend the underlying action. When Utica disclaimed coverage, Yashi Associates sued.  Utica's summary judgment motion was granted by the lower court. 

   The Appellate Division reversed.  The Court noted Utica had established, prima facie, that Yashi Associates was not entitled to coverage as an additional insured because it was not named as an additional insured in the policy.  Moreover, the commercial liability section of the policy excluded coverage for bodily injury or property damage assumed under a contract. 

   However, the policy further stated that the exclusion "does not apply to an incidental contract."  The policy's definition of an "incidental contract" included leases, but the policy did not expressly state that Utica was obligated to provide coverage pursuant to the terms of an "incidental contract."  Therefore, the ambiguity raised an issue of fact as to whether Utica was obligated to defend Yashi Associates by operation of the policy and the lease.