Principals as Insureds under Volunteer Auto Coverage Endorsements and Co-Excess Doctrine

Introduction

County of Ulster v. Alliance of Nonprofits for Insurance Risk Retention Group is a Second Circuit summary order decided on April 7, 2025. The case arises from a tragic 2018 collision in which a volunteer driver, Barbara Hyde, lost control of her vehicle while transporting a senior citizen under a collaborative Senior Transportation Program run by Jewish Family Services of Ulster County (JFS) and funded by the County of Ulster. After Hyde’s death and the injured passenger’s lawsuit in state court against the County and JFS, the County sought a federal declaratory judgment that JFS’s Risk Retention Group policy (the “ANI Policy”) covers the County’s vicarious liability. The insurer, Alliance of Nonprofits for Insurance Risk Retention Group (“ANI”), counterclaimed that it did not. At issue on appeal were (1) whether the County is an “insured” under the ANI Policy by virtue of its assumption of liability for a covered volunteer, and (2) how the ANI Policy’s “other insurance” clause governs priority vis-à-vis the County’s separate municipal insurer (NYMIR).

Summary of the Judgment

The Second Circuit affirmed in part and vacated in part the district court’s grant of summary judgment to the County. It held that:

Under the volunteer-driver endorsement in the ANI Policy, Hyde was a covered “insured,” and subsection (c) of the policy’s “Who Is An Insured” provision extends coverage to any party (including the County) vicariously liable for the conduct of a covered insured.
Because the County is itself an “insured” under the terms of the ANI Policy, its entitlement to coverage does not depend on any indemnification obligation and thus does not trigger the policy’s “insured contract” exception to the co-insurance clause.
As a result, the ANI Policy and the County’s NYMIR Policy are co-excess rather than one being primary to the other.

The case was remanded for further proceedings consistent with those holdings.

Analysis

Precedents Cited

Byrne v. Rutledge, 623 F.3d 46 (2d Cir. 2010): Established the standard of de novo review for summary judgment appeals.
EMF Gen. Contracting Corp. v. Bisbee, 6 A.D.3d 45 (N.Y. App. Div. 1st Dep’t 2004): Defined the elements required to prove contractual abandonment by conduct.
Goldman v. White Plains Center for Nursing Care, LLC, 896 N.Y.S.2d 173 (2008): Reiterated that unambiguous written agreements are enforced according to their plain terms.
Sport Rock Intl., Inc. v. American Cas. Co., 65 A.D.3d 12 (N.Y. App. Div. 1st Dep’t 2009): Set out the rule that “other insurance” clauses govern allocation when multiple policies cover the same risk.

Legal Reasoning

Status as an Insured: The ANI Policy’s auto-liability section defines “insured” in three categories: (a) the named insured (JFS), (b) anyone using a JFS vehicle with permission, and (c) anyone vicariously liable for the conduct of an insured under (a) or (b). A separate endorsement added “volunteers” providing services to JFS in non-owned vehicles. Applying well-settled principles of contract interpretation, the court concluded that:

The “Agreement for Professional Services” between Ulster County and JFS unambiguously designates volunteer drivers as JFS volunteers, notwithstanding overlapping duties with the County.
There was no mutual, unequivocal conduct sufficient to abandon that Agreement, as required under New York law for abandonment by performance.
Therefore Hyde fell within the endorsement’s volunteer-driver coverage, making her a covered “insured” under subsections (a)–(b), and subsection (c) then extends coverage to the County to the extent of its vicarious liability.

Priority of Coverage: Both the ANI Policy and the County’s NYMIR Policy contain co-insurance clauses providing that each is excess over “other insurance.” The ANI Policy, however, carves out coverage “assumed under an insured contract” as primary. The district court had deemed the County’s contract with JFS (including indemnification) an “insured contract,” making ANI primary. The appellate court disagreed, holding that the County’s status as an “insured” under the Policy is independent of any contract-assumed liability. Because the loss does not arise from liability “assumed” under a separate contract, the co-insurance clauses on the two policies operate in parallel, making them co-excess.

Impact

This decision clarifies two important points for public entities and RRG insurers:

Vicarious Coverage Principle: When a risk-retention group policy includes volunteers in an auto-liability endorsement, any principal who is vicariously liable for a covered volunteer is itself an “insured” under the policy.
Other Insurance Allocation: A policyholder’s independent insured status under a policy prevents “insured contract” exceptions from overriding co-insurance clauses, leading to co-excess coverage with other applicable policies.

Future risk-sharing arrangements and municipal programs that rely on volunteer drivers will need clear policy language on endorsement coverage and “other insurance” clauses to avoid surprises in loss allocation.

Complex Concepts Simplified

Summary Order (Non-Precedential): A brief appellate ruling resolving a case but not binding future courts.
Endorsement: A policy amendment that adds or modifies coverage, here extending liability protection to volunteers driving non-owned vehicles.
“Insured Contract” Exception: A clause making some policy coverage primary if liability is “assumed” under a specified contract (often an indemnification clause).
Co-Excess (Other Insurance) Clause: A provision designating the policy as excess when other insurance also covers the same risk.
Vicarious Liability: Legal responsibility imposed on one party (the principal) for the wrongful acts of another (the agent or volunteer).
Contract Abandonment: To show that parties abandoned an agreement by conduct, New York law requires mutual, unequivocal acts inconsistent with continued contractual obligation.

Conclusion

County of Ulster v. Alliance of Nonprofits establishes that when a risk retention group policy explicitly covers volunteer drivers, it also covers any entity vicariously liable for those volunteers. Moreover, a policyholder’s independent insured status prevents an “insured contract” exception from displacing the co-insurance clause—yielding co-excess treatment with other policies. This decision will guide insurers, municipalities, and nonprofits in structuring volunteer programs and insurance arrays to ensure intended coverage and clear priority of recovery in the event of loss.