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Liberty prevails in coverage dispute with Admiral

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A Liberty Mutual Insurance Co. unit has prevailed in a coverage dispute with Admiral Insurance Co., with an appeals court upholding a lower court ruling that its insurance policy obligates it to provide only excess, not primary, coverage for the litigation costs of additional insureds.

In October 2013, Kevin Harrington was injured in a fall while working on a construction project at the State University of New York at Oneonta, according to court papers in Liberty Insurance Corp. v. Admiral Insurance Co.

He filed suit against parties including Victor, New York-based Christa Construction L.L.C., the general contractor in the project, charging negligence in the accident. 

The subcontractor on the project, was Schenectady, New York-based Schenectady Steel Co. Inc., while the sub-subcontractor was Coxsackie, New York-based Capital Construction Management Services L.L.C.
Schenectady had commercial general liability insurance coverage with Liberty Insurance, a unit of Boston-based Liberty Mutual Insurance. Capital had CGL coverage with Laurel Township, New Jersey-based Admiral, according to court papers.

Admiral agreed to provide a primary defense for Schenectady, but alleged that it and Liberty provide co-primary coverage with Christa and other defendants in the litigation, New York State, the college and the Albany-based New York Construction Fund, according to court papers.

Liberty Insurance filed suit in U.S. District Court in Albany, New York, in July 2014, seeking a declaration that Admiral’s was the primary applicable policy.  Based on an analysis of its policy’s language, the District Court ruled in Liberty’s favor, holding Admiral’s insurance policy required coverage of litigation costs of certain additional insureds on a primary basis, while Liberty was obligated to provide only excess coverage.

A three-judge panel of the 2nd U.S. Circuit Court of Appeals in New York agreed. The District Court “correctly determined that the Liberty policy is excess to, not co-primary with, the Admiral policy,” said the brief decision.