Two interesting issues were presented in Jeffrey M. Brown, Assoc., Inc. v. Zurich Am. Ins. Co., 2010 N.J. Super. LEXIS 108 (N.J. Super. Ct. App. Div. June 23, 2010). First, what was the scope of coverage provided by an additional insured endorsement which provided the coverage was "excess over any other insurance?" Second, could an additional insured endorsement which provided only excess coverage be construed to provide primary coverage if the policyholder contracted to obtain additional insurance that was primary coverage?
The general contractor entered a subcontract with CAP Services to demolish a structure at a construction site. The general contractor had its own CGL policy with Zurich. But the subcontract required CAP to provide primary additional insured coverage for the general contractor. CAP was already insured under a CGL policy issued by Interstate. The policy included an additional insured endorsement which provided coverage that was "excess over any other insurance." CAP never notified Interstate that it had entered a subcontract and Interstate never issued a certificate of insurance to the general contractor.
When employees of a subcontractor of CAP were injured at the job site, they sued the general contractor. Zurich defended while Interstate argued it had no coverage obligations. The general contractor and Zurich sued Interstate. The trial court granted summary judgment against Interstate, finding that under the subcontract between the general contractor and CAP, the Interstate policy provided primary coverage.
The appellate division reversed. Interstate's policy was "excess" to any other coverage available to an additional insured such as the general contractor. Zurich's policy made Interstate's coverage of the general contractor under its endorsement "excess." Further, Interstate's policy did not commit to provide CAP with coverage for whatever additional insured coverage obligation CAP might later agree by contract to provide. CAP could not expand the scope of coverage under the additional insured endorsement if it failed to notify Interstate of the terms of the subcontract obligation to provide additional insured coverage.
