Two carriers allegedly refused additional insured coverage after a New York City construction injury - now a fellow insurer is taking them to court.
Westchester Surplus Lines Insurance Company filed a federal lawsuit on February 13, 2026, accusing Clear Blue Specialty Insurance Company and Allied World National Assurance Company of walking away from their obligations to defend and cover two property owners who, Westchester says, should have been protected under their policies.
At the heart of the case is a construction site injury at 559 W 164th Street in Manhattan. Martin Garcia, an employee of subcontractor City Lights Construction Corp., alleges he was struck by a falling object on October 31, 2024. He claims injuries to his cervical, thoracic, and lumbar spine, lost earnings of approximately $56,755 and continuing, and special damages of approximately $125,000 and continuing.
The underlying injury lawsuit names several parties, including property owners GVS Properties, LLC and Alma Realty Corp., and invokes New York Labor Law Sections 200, 240, and 241 — statutes that impose significant duties on property owners when it comes to worker safety at construction sites. Section 240, widely known as the "Scaffold Law," holds owners strictly liable for gravity-related injuries and remains one of the most closely watched areas of construction risk in the state.
According to the court filing, GVS had hired two subcontractors for work at the property: Uphold Construction Corp. for scaffold erection and maintenance, and City Lights for façade repair and maintenance. Both were contractually required to carry CGL and excess/umbrella insurance naming GVS and Alma as additional insureds on a primary and non-contributory basis. Both contracts also included indemnification provisions requiring the subcontractors to hold GVS and Alma harmless, to the fullest extent permitted by law.
Westchester alleges that Clear Blue issued a CGL policy to Uphold and Allied World issued one to City Lights, each carrying limits of $2,000,000 per occurrence and $4,000,000 in the aggregate. Both policies, the filing states, contain endorsements extending additional insured coverage to entities required by written contract — which, Westchester argues, includes GVS and Alma.
When GVS, Alma, and Westchester asked both carriers to step in and provide defense and indemnification, both allegedly declined. Westchester says it has since been covering the cost of defending GVS and Alma on its own, and is now seeking full reimbursement — plus statutory interest at nine percent per year.
The lawsuit, filed in the U.S. District Court for the Southern District of New York, lays out seven claims and asks the court to confirm GVS and Alma's additional insured status under both policies, both carriers' duties to defend and indemnify, and Westchester's right to recover what it has spent.
No determination has been made in the case. Westchester has requested a jury trial.
