A fresh legal battle between two insurers is brewing in New York, and it’s all about who should pick up the tab when things go wrong on a construction site.
On September 8, 2025, U.S. Specialty Insurance Company filed a complaint in the Southern District of New York against American Empire Surplus Lines Insurance Company. The issue? U.S. Specialty claims it has been left covering the costs for a slip-and-fall accident in a Bronx parking garage, while American Empire has not defended or indemnified the general contractor, MDG Design & Construction LLC.
Here’s the setup: MDG was hired as the general contractor for the parking garage, and AMB Construction, Inc. was the subcontractor performing roof repairs. When a person named Natal suffered injuries from a slip-and-fall, a lawsuit was filed, alleging MDG’s negligence. According to the complaint, MDG was an additional insured under a policy American Empire issued to AMB. U.S. Specialty, which also provided insurance, says it repeatedly tendered the defense and indemnification of MDG to American Empire, but did not receive a response.
The heart of the matter is a familiar one for insurance professionals: When a contractor is named as an additional insured on a subcontractor’s policy, which insurer is responsible for defending and indemnifying that contractor? U.S. Specialty alleges that American Empire’s policy should have responded, particularly because AMB was performing roof repairs at the time of the incident. The complaint references deposition testimony from MDG’s construction manager confirming AMB’s work on the garage.
On May 30, 2025, U.S. Specialty’s attorneys sent a supplemental tender letter to American Empire, again requesting that it defend and indemnify MDG in the underlying personal injury action. According to the complaint, American Empire did not assume the defense, leaving U.S. Specialty to handle the costs and responsibilities.
U.S. Specialty is now asking the court for a declaratory judgment that MDG is an additional insured under the American Empire policy in connection with the underlying action. The insurer is also seeking a declaration that American Empire is obligated to defend and indemnify MDG on a primary and non-contributory basis, and that U.S. Specialty is entitled to withdraw from the defense. Additionally, U.S. Specialty seeks damages for all costs and expenses incurred in defending MDG, plus interest.
The complaint does not include the full policy language, but the dispute centers on the interpretation and application of the additional insured endorsement and American Empire’s obligations under its policy.
As this is a newly filed complaint, the allegations have not been proven, and American Empire will have the opportunity to respond. For insurance professionals, the case highlights the importance of understanding additional insured provisions and the potential for disputes between insurers over defense and indemnity obligations in construction-related claims.
The outcome of this case could influence how similar coverage disputes are handled in the future. For now, the question remains: when multiple insurers are involved in a construction project, who steps up when an accident happens?
