Opinion
22694
October 22, 2002
Richard W. Babinecz, New York City, for plaintiff.
Robin Schepp Yuhas Doman, New York City, for defendant.
DECISION, ORDER and JUDGMENT
This is a declaratory judgment action in which plaintiff Consolidated Edison Company of New York, Inc. ("plaintiff" or "Con Edison") seeks a declaration that defendant Liberty Mutual is obligated to indemnify it in an underlying personal injury action, Rodriguez v. Con Edison et al., Index No. 115626/00, currently pending before the Supreme Court, New York County.
Pursuant to a contract between Con Edison and Counties, Inc. of New York ("Counties"), Counties undertook to install new gas services, replace existing gas services, and install new plastic gas mains in Westchester County during the period February 1, 1999 through January 31, 2001. Under the terms of the contract between Con Edison and Counties, Counties was obliged to procure a policy of general liability insurance covering accidents or injuries arising out of the work, and naming Con Edison as an additional insured. Said policy was duly purchased by Counties from Liberty Mutual (General Liability Policy Number RG 1-63G-004132-017) and contains an endorsement naming Con Edison as an additional insured.
On September 30, 1999, Gonzolo Rodriguez, an employee of Counties, was injured when he stepped into a hole while engaged in installing a gas service pursuant to Counties' contract with Con Edison. Rodriguez sued Con Edison, which in turn commenced a third party action against Counties. Counties' insurer, Liberty Mutual, admitted its obligation to defend Con Edison but refused to indemnify unless "Con Ed is found to be free of negligence and its liability is only vicarious." Con Edison therefore brought the instant declaratory judgment action, and now moves for summary judgment on its claim for indemnification under its "additional insured" coverage with Liberty Mutual.
It is well settled that "additional insured" coverage provides coverage to the named additional insured without regard to negligence. See Consolidated Edison Co. of New York, Inc. v. Hartford Ins. Co., 203 A.D.2d 83 (1st Dept. 1994). Under the endorsement at issue here — which does not limit the insurer's coverage of Con Edison to those situations in which plaintiff is only vicariously liable — Liberty Mutual is accordingly obligated to provide full primary insurance coverage to Con Edison in the underlying tort action. See Charter Oak Fire Ins. Co. v. Trustees of Columbia University in the City of New York, 198 A.D.2d 134, 135 (1st Dept. 1993).
In the alternative, Liberty Mutual argues that Con Edison's "self-insurance" "should be deemed co-insurance" with Liberty Mutual's policy, such that "the defense and indemnification costs [should be] split 50/50." Although this issue has never been directly addressed in New York, to the extent that Liberty Mutual's endorsement could be construed as providing coverage only to be shared with, or to contribute in "excess" of, "other" applicable insurance, the Court holds that "self-insurance" does not qualify as "other applicable insurance."
A reference to "other insurance" in, e.g., an "excess provision" of an insurance contract has been found to contemplate a second policy of insurance of like kind issued by an(other) insurance company in exchange for a premium charged. See Wake County Hospital System, Inc. v. National Casualty Co., 804 F. Supp. 768 (E.D.N.C. 1992), aff'd 996 F.2d 1213 (4th Cir. [N.C.] 1993); 16 G. Couch, Insurance 2d Sec. 62.87 (rev. ed. 1983). Self-insurance, on the other hand, has been defined as a representation by the self-insured entity that it has the financial means to pay any judgments against it. See Guercio v. Hertz Corp., 40 N.Y.2d 680 (1976);Aetna Casualty and Surety Co. v. World-Wide Rent-A-Car, Inc., 28 A.D.2d 286 (1st Dept. 1967); People ex rel. Spitzer v. ELRAC, Inc., 192 Misc.2d 78 (Sup.Ct., N.Y. Co., 2002). That is, a self-insurer is not an insurer of anything other than its own ability to pay for damages for which it is legally responsible. Id.
Put somewhat differently, "self-insurance" does not qualify as "insurance" at all. It has even been held that "self-insurance" is the very antithesis of insurance, because "self-insurance" means the retention of the risk of loss by the one upon whom it is directly imposed by law or contract, whereas "insurance" is a agreement by means of which the insured shifts the risk of loss to an insurer. See American Nurses Association v. Passaic General Hospital, 192 N.J. Super. 486 (1984),aff'd in part and rev'd in part, 98 N.J. 83 (1984); see also U.S. v.Newton Livestock Auction Market, Inc., 336 F.2d 673 (C.A. Kan. 1964). A majority of jurisdictions across the nation subscribe to the foregoing view of self-insurance as "not insurance" in, inter alia, an "other insurance" context. See Universal Underwriters Inc. Co. v. Marriott Homes, Inc., 286 Ala. 231 (1970); State Farm Mut. Automobile Ins. Co. v.Universal Atlas Cement Co., 406 So.2d 1184 (Fla.App. 1981), review denied 413 So.2d 877 (Fla. 1982); American Family Mut. Ins. Co. v.Missouri Power Light Co., 517 S.W.2d 110 (Mo. 1974); United Nat'l Ins. Co. v. Philadelphia Gas Works, 221 Pa. Super. 161 (1972); Allstate Ins. Co. v. Zellars, 452 S.W.2d 539 (Tex.Civ.App.), mod. on other grounds, 462 S.W.2d 550 (Tex. 1970); Home Indemnity v. Humble Oil, 317 S.W.2d 515 (1958); see also Nassau Ins. Co. v. Guarascio, 82 A.D.2d 505 (2nd Dept. 1981); 8A J. Appleman, Insurance Law and Practice, Sec. 4912 (rev. ed. 1981); but cf. Hillegass v. Landwehr, 176 Wis.2d 76 (1993);Southern Home Ins. Co. v. Burdette's Leasing Serv., 268 S.C. 472 (1977).
Given the strong language in the New York cases defining self-insurance as "not insurance but an assurance . . . that judgments will be paid" (Guercio v. Hertz Corp., supra at 684; see also Aetna Cas. Surety Co. v. World Wide Rent-A-Car, Inc., supra; People ex rel. Spitzer v.ELRAC, Inc., supra) — coupled with Con Edison's efforts to guarantee that it would be covered under Counties' liability policy with Liberty Mutual — the Court subscribes to the majority reasoning outlined above, and concludes that, at least under the circumstances presented here, Con Edison's "self-insurance" does not qualify as "co-insurance."
Accordingly it is
ORDERED that plaintiff's motion for summary judgment is granted, and it is further
ADJUDGED and DECLARED that Liberty Mutual is contractually bound to indemnify as well as to defend Con Edison in Rodriguez v. Con Edison et al., Index No. 115626/00, pursuant to the "other insured" endorsement in Liberty Mutual's General Liability Policy Number RG 1-63G-004132-017 with Counties, Inc. of New York.
The foregoing constitutes the Decision, Order and Judgment of the Court.