The New York Court of Appeals upheld an appellate decision that ruled that under a contractor’s policy, a construction manager does not qualify as an additional insured because there is no direct contact between the two companies, reports Law360. New York Insurance Recovery & Advisory partner Alexander Hardiman told the publication that the ruling is an "unfortunate decision for the construction industry.”

"The traditional custom and practice in both the insurance and construction industry has been to confer additional-insured status on any entity contractually required by a construction project owner to be named as an additional insured under a contractor's general liability policy," Hardiman told Law360. “The decision essentially upends that custom and practice and suggests that a contractor may have to execute separate contracts with every entity required by the construction project owner to be named as an additional insured.”

According to him, the opinion will “add to the morass of additional-insured issues that you see in the industry and the courts.” For a company operating in multiple jurisdictions, Hardiman said conflicting decisions out of different courts may cause problems “in terms of the number and kind of contracts they have to enter into to ensure the intended additional-insured coverage is obtained.”

Read more about this decision in Law360.