A New York appellate court has ruled on a significant insurance case involving Erie County and Selective Insurance Company of America. The court's decision, issued on June 26, 2026, addresses the responsibilities of insurance companies when it comes to providing coverage in personal injury lawsuits. This ruling affects how local governments and contractors secure liability insurance in the future.
The case, County of Erie v. Selective Insurance Company of America, centered around a personal injury lawsuit stemming from an accident at a park owned by Erie County. The county had hired Destro Brothers Concrete Company, Inc. for paving work and LiRo Engineers, Inc. for construction management. When a woman fell while riding her bicycle in the park, she sued the county, Destro, and LiRo for damages. The county sought insurance coverage from Destro's insurer, Selective, and LiRo's insurer, Zurich American Insurance Company, but both companies denied coverage.
This led Erie County to file a lawsuit against Selective and Zurich, seeking a declaration that the insurers were obligated to provide coverage in the underlying personal injury case. The county's legal action included claims of breach of contract and sought to clarify its status as an additional insured under the insurance policies issued to Destro and LiRo.
The dispute reached the Appellate Division of the Supreme Court of the State of New York after Selective Insurance appealed a lower court's decision that denied its motion to strike the county's complaint. The county had argued that it was entitled to coverage under the insurance policies because it was named as an additional insured. The case's docket number is 436 CA 24-01620.
The court ruled that the lower court had erred in granting the county's motion for summary judgment against Selective. The ruling stated, "Neither the County nor Selective met the burden on their respective motion and cross-motion of establishing that their construction of the contract regarding the scope of the paving project is the only fair construction." This indicates that both parties failed to provide sufficient evidence to support their claims regarding the insurance coverage.
Moreover, the court emphasized that the language in the contract between the county and Destro was ambiguous concerning whether the paving work at the park was included in the insurance coverage. The ruling noted that "contract language is reasonably susceptible of more than one interpretation," allowing for the possibility of further examination of the evidence to determine the parties' intent.
In a separate part of the ruling, the court addressed Zurich's appeal and confirmed that the company must defend the county in the underlying lawsuit. The court stated that Zurich had not adequately demonstrated that the professional services exclusion in its policy applied to the case. The ruling reiterated that an insurer's duty to defend is broad, requiring coverage whenever the allegations in the underlying complaint suggest a reasonable possibility of coverage.
This ruling has significant implications for local governments and contractors in New York. It clarifies the obligations of insurance companies to provide coverage in personal injury lawsuits, especially when multiple parties are involved. The decision reinforces the principle that insurers must defend their insured parties unless they can clearly show that an exclusion applies.
The ruling also highlights the importance of clear contract language in insurance agreements. Ambiguities in contracts can lead to disputes and may require further legal interpretation, which can prolong the resolution of claims and increase legal costs for all parties involved.
Looking ahead, this case may influence how local governments negotiate insurance contracts with their contractors. The ruling underscores the need for clarity in contract terms, particularly regarding the scope of work and insurance coverage. As municipalities continue to face liability claims, the lessons from this case will likely resonate in future insurance negotiations.
As for the possibility of an appeal, the court's ruling can be appealed to the New York Court of Appeals, the state's highest court. However, details regarding any potential appeal were not available in the court filing. It remains to be seen if either party will seek further review of the appellate court's decision.
This case serves as a reminder of the complexities involved in insurance coverage disputes and the importance of understanding the terms of insurance policies, especially for public entities like Erie County.