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Donato Construction Company, Inc. v. Casualty & Surety Company

A-5559-96T2 (N.J. Super. App. Div. 1998) (Unpublished)

LEASES; INSURANCE; LIABILITY—Where a landlord is named as an additional insured on its tenant’s insurance policy, even if such coverage is limited to matters arising out of use of the leased premises, the landlord is entitled to coverage for a claim on the parking lot if the incident originated from, or grew out of, the use of the leased premises.

An employee of a tenant in a three tenant retail building was injured when he fell while walking to a dumpster located in the parking lot. The dumpster was for the exclusive use of his employer and was paid for by that company. The employee claimed that his fall was caused by a crater-like hole in the pavement. Therefore, he sued the landlord. His employer’s lease contained a clause requiring the employer to obtain liability insurance for bodily injury and property damage and to name the landlord as an additional insured “but only with respect to liability rising out of the ownership, maintenance or use of that part of the premises leased to” the tenant. The landlord sought coverage under the tenant’s policy. The insurance company asserted it owned no duty to the landlord because the accident did not occur within the confines of the leased premises. The Court, in ruling against the insurance company, concluded that there was a substantial nexus between the accident and the leased premises and that the risk of liability could be traced directly to the tenant’s business presence. Although the accident occurred outside of the leased premises, it was within the landscape of risk as contemplated by the insurance policy. In line with precedent, the carrier was fully liable because the incident “originated from or grew out of the use of the leased premises.”


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