Not Nice to Subrogate Against your Own Insured
Read the full article at https://www.linkedin.com/pulse/new-york-court-slaps-insurers-who-subrogated-against-barry and see the full video at https://rumble.com/v1ktd3f-new-york-court-slaps-insurers-who-subrogated-against-their-own-insureds.html and at
and at https://zalma.com/blog plus more than 4300 posts.
Zurich American Insurance Company (“Zurich American”) and American Zurich Insurance Company (“Zurich”) sued Defendants Certain Underwriters at Lloyd’s, London Subscribing to Policy Number B12630308616 (“Lloyd’s”) and Arch Insurance Company (“Arch”) over an insurance coverage dispute arising from a personal injury lawsuit. Zurich moved for summary judgment against Lloyd’s seeking a declaration that the anti-subrogation rule precludes Lloyd’s from commencing a claim for common law indemnification or contribution against Skanska-Walsh Joint Venture (“Skanska”).
In Zurich American Insurance Company and American Zurich Insurance Company v. Certain Underwriters At Lloyd’s Of London Subscribing To Policy Number B12630308616 and Arch Insurance Company, No. 21-CV-6755 (JPO), United States District Court, S.D. New York (September 12, 2022) the USDC applied New York’s anti-subrogation law.
BACKGROUND
The Port Authority of New York and New Jersey (“Port Authority”) operates LaGuardia Airport and hired LaGuardia Gateway Partners LLC (“LGA”) as the developer of a construction project at LaGuardia (“LGA Project”). In April 2017, LGA entered into a sub-contract with Skanska (the “Contract”) to perform work on the LGA Project. Section 20.1 of the Contract requires LGA to procure a commercial general liability policy, under which Skanska would be the first named insured and LGA would be a named insured. The contract required Skanska to “indemnify, defend and hold harmless [LGA] for any losses suffered or costs incurred by [LGA] . . . to the extent caused by . . . any third-party claims for bodily injury . . . arising out of (1) [Skanska’s] negligent performance . . . or (2) any breach of [the Contract] by any [Skanska] party or any breach thereof by [LGA] directly caused by the acts or omissions of any [Skanska] party.” The Contract contains a similar clause requiring Skanska to indemnify Port Authority for its losses.
Skanska and LGA obtained a Contractors Controlled Insurance Program (“CCIP”) for the LGA Project, which afforded $300 million in commercial general liability insurance coverage to Skanska, LGA, and Port Authority. Zurich American issued the primary commercial general liability policy in the CCIP tower with a $5 million limit (“Zurich American Policy”), Arch issued the first layer excess policy with a $5 million limit (“Arch Policy”), and Lloyd’s issued a second layer excess policy with a $20 million limit (“Lloyd’s Policy”). American Zurich also issued workers’ compensation and employer’s liability to Skanska.
On January 21, 2018, Quentin Mayo, a Skanska employee, was working at the LGA Project when he was injured..) As a result, he filed a lawsuit against Port Authority and LGA. Port Authority and LGA then requested coverage under the Zurich American Policy, which Zurich American agreed to provide.
Fabiani Cohen & Hall (“FCH”) was hired as defense counsel for LGA and Port Authority. In March 2021, Lloyd’s emailed FCH and asked why it had not instituted a third-party action against Skanska for common law indemnity because Mayo was employed by Skanska. Following discussions among Lloyd’s, Zurich, and FCH, Zurich American filed this suit for declaratory judgment.
DISCUSSION
Zurich sought a declaratory judgment from the USDC that any claim potentially brought by Lloyd’s against Skanska for common law indemnification or contribution was barred by the anti-subrogation doctrine of New York. The sole issue before the USDC was whether the anti-subrogation rule bars Lloyd’s from causing its insureds, LGA and Port Authority, to sue its other named insured, Skanska, for common law indemnification or contribution.
Under New York law, the anti-subrogation rule provides that that “[a]n insurer… has no right of subrogation against its own insured for a claim arising from the very risk for which the insured was covered.” N. Star Reins. Corp. v. Continental Ins. Co, 82 N.Y.2d 281, 294 (1993).
The rule was established both to prevent the insurer from passing along a loss to its own insured and to diminish the possibility of a conflict of interest between the insurer and insured that may otherwise affect the insurer’s incentive to provide a defense for the insured.
The USDC agreed with Zurich that the anti-subrogation rule applies here because the two essential elements are met.
First, Lloyd’s is seeking to subrogate against its named insured, Skanska.
Second, the risk of injury to Skanska employees is covered by the Lloyd’s Policy. The Lloyd’s Policy provides for an Employer’s Liability exclusion and an insured contract carveout, meaning that any contractual indemnity claim asserted by LGA or Port Authority against Skanska is covered.
In sum, while the theoretical possibility exists for a contractual indemnity claim in practice its application is blunted by the paragraphs which immediately follow. Lloyd’s contended that a claim for indemnification or contribution against Skanska is not a covered risk and if there is no viable claim, there is no conflict of interest for which the anti-subrogation rule is meant to guard against.
However, the decision in ACE American Insurance Company v. American Guarantee & Liability Insurance Company, 257 F.Supp.3d 596 (S.D.N.Y. 2017) ACE American Insurance Company and American Guarantee & Liability Insurance Company were in a dispute over which insurance company was responsible for funding a $5 million share of a settlement for a personal injury lawsuit. ACE had issued workers’ compensation and employers’ liability policy to a company called Wager Contracting, while American Guarantee had issued to it a commercial umbrella liability policy. American Guarantee sought to bring an indemnity claim as the subrogee of one of its insureds against another one of its insureds. The court concluded that the antisubrogation rule prohibited American Guarantee from bringing such a claim.
Zurich’s motion for summary judgment was granted because the USDC declared, as a matter of New York law, that the anti-subrogation rule precludes Lloyd’s from commencing a claim for common law indemnification or contribution against Skanska, its insured.
ZALMA OPINION
The covenant of good faith and fair dealing requires that an insurer should do nothing to deprive an insured of the benefits of the policy. Instructing counsel to sue an insured on behalf of another insured is depriving an insured of the benefits promised by the insurer to the insured sued. No prudent insurer will sue its own insured. It makes no sense, is not nice, and is a waste of time and effort.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
This image has an empty alt attribute; its file name is Books-by-Barry-Zalma-Esq.-CFE-1024x576.jpg
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and [email protected].
Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.
Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.
Now available Barry Zalma’s newest book, The Tort of Bad Faith, available here.
The new book is available as a Kindle book, a paperback or as a hard cover.
Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com.
Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/
Convicted Criminal Seeks to Compel Receiver to Protect his Assets
Post number 5291
See the video at and at and at https://www.zalma.com/blog plus more than 5250 posts.
The Work of a Court Appointed Receiver is Constitutionally Protected
In Simon Semaan et al. v. Robert P. Mosier et al., G064385, California Court of Appeals, Fourth District, Third Division (February 6, 2026) the Court of Appeals applied the California anti-SLAPP statute which protects defendants from meritless lawsuits arising from constitutionally protected activities, including those performed in official capacities. The court also considered the doctrine of quasi-judicial immunity, which shields court-appointed receivers from liability for discretionary acts performed within their official duties.
Facts
In September 2021, the State of California filed felony charges against Simon Semaan, alleging violations of Insurance Code section 11760(a) for making...
When There are Two Different Other Insurance Clauses They Eliminate Each Other and Both Insurers Owe Indemnity Equally
Post number 5289
In Great West Casualty Co. v. Nationwide Agribusiness Insurance Co., and Conserv FS, Inc., and Timothy A. Brennan, as Administrator of the Estate of Pat- rick J. Brennan, deceased, Nos. 24-1258, 24-1259, United States Court of Appeals, Seventh Circuit (February 11, 2026) the USCA was required to resolve a dispute that arose when a tractor-trailer operated by Robert D. Fisher (agent of Deerpass Farms Trucking, LLC-II) was involved in a side-impact collision with an SUV driven by Patrick J. Brennan, resulting in Brennan’s death.
Facts
Deerpass Trucking, an interstate motor carrier, leased the tractor from Deerpass Farms Services, LLC, and hauled cargo for Conserv FS, Inc. under a trailer interchange agreement. The tractor was insured by Great West Casualty Company with a $1 million policy limit, while the trailer was insured by Nationwide Agribusiness Insurance Company with a $2 million ...
Opiod Producer Seeks Indemnity from CGL Insurers
Post number 5288
Read the full article at https://lnkd.in/guNhStN2, see the full video at https://lnkd.in/gYqkk-n3 and at https://lnkd.in/g8U3ehuc, and at https://zalma.com/blog plus more than 5250 posts.
Insurers Exclude Damages Due to Insured’s Products
In Matthew Dundon, As The Trustee Of The Endo General Unsecured Creditors’ Trust v. ACE Property And Casualty Insurance Company, et al., Civil Action No. 24-4221, United States District Court, E.D. Pennsylvania (February 10, 2026) Matthew Dundon, trustee of the Endo General Unsecured Creditors’ Trust, sued multiple commercial general liability (CGL) insurers for coverage of opioid-related litigation involving Endo International PLC a pharmaceutical manufacturer.
KEY FACTS
Beginning as early as 2014, thousands of opioid suits were filed by governments, third parties, and individuals alleging harms tied to opioid manufacturing and marketing.
Bankruptcy & Settlements
Endo filed Chapter 11 in August 2022; before bankruptcy it ...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lost the ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah. Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being. Jews believe the force we call G_d created the entire universe and everything in it. Jews feel G_d is all seeing and knowing and although we can’t see Him, He is everywhere and in everyone.We understand...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
Read the full article at https://www.linkedin.com/pulse/passover-americans-barry-zalma-esq-cfe-5vgkc.
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lostthe ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah.
Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and ...
You Get What You Pay For – Less Coverage Means Lower Premium
Post number 5275
Posted on January 30, 2026 by Barry Zalma
See the video at and at
When Experts for Both Sides Agree That Two Causes Concur to Cause a Wall to Collapse Exclusion Applies
In Lido Hospitality, Inc. v. AIX Specialty Insurance Company, No. 1-24-1465, 2026 IL App (1st) 241465-U, Court of Appeals of Illinois (January 27, 2026) resolved the effect of an anti-concurrent cause exclusion to a loss with more than one cause.
Facts and Background
Lido Hospitality, Inc. operates the Lido Motel in Franklin Park, Illinois. In November 2020, a windstorm caused one of the motel’s brick veneer walls to collapse. At the time, Lido was insured under a policy issued by AIX Specialty Insurance Company which provided coverage for windstorm damage. However, the policy contained an exclusion for any loss or damage directly or indirectly resulting from ...
