Volunteer Coverage and Policy Priority Under Risk Retention Group Policies: County of Ulster v. Alliance of Nonprofits

Introduction

County of Ulster v. Alliance of Nonprofits for Insurance Risk Retention Group, decided April 7, 2025 by the U.S. Court of Appeals for the Second Circuit, confronts two central issues in insurance law:

Whether a nonprofit’s volunteer—Barbara Hyde—qualifies as an “insured” under an endorsement to the Alliance of Nonprofits for Insurance Risk Retention Group’s (“ANI”) policy and, derivatively, whether the County of Ulster (the “County”) is an insured for liability arising from her conduct.
How the ANI policy ranks against a separate municipal policy issued by New York Municipal Insurance Reciprocal (“NYMIR”) when both policies cover the same automobile risk.

The dispute arose after Hyde, driving in the County’s Senior Transportation Program managed under contract by Jewish Family Services of Ulster County (“JFS”), lost control of her car and collided with a County-owned bus. Hyde died and her passenger, Joyce Northacker, was injured. In separate actions, Northacker sued the County and JFS in state court, and the County sought a declaration in federal court that the ANI policy covered its liability. ANI counterclaimed for a declaration of no coverage. On cross-motions for summary judgment, the district court granted relief to the County. ANI appealed.

Summary of the Judgment

The Second Circuit affirmed in part and vacated in part. It held:

Insured Status: Hyde was a volunteer of JFS under the parties’ written Agreement and therefore an “insured” under the ANI policy endorsement. Because the County could be held liable for the conduct of an insured, it too qualified as an insured under the same policy.
Priority of Coverage: Contrary to the district court’s view that the ANI policy was primary, the court concluded that neither policy’s “other insurance” clause elevates one to primary status, so the ANI and NYMIR policies are co-excess with respect to coverage above Hyde’s personal auto limits.

The judgment was affirmed insofar as it recognized insured status for Hyde and the County, vacated insofar as it declared ANI coverage primary, and remanded for further proceedings consistent with the co-excess ruling.

Analysis

1. Precedents Cited

Byrne v. Rutledge (623 F.3d 46 (2d Cir. 2010)) – Established standard of review and summary judgment principles in the Second Circuit.
EMF General Contracting Corp. v. Bisbee (6 A.D.3d 45 (N.Y. App. Div. 1st Dep’t 2004)) – Set forth requirements to prove contract abandonment by conduct.
Aliperti v. Laurel Links, Ltd. (27 A.D.3d 675 (N.Y. App. Div. 2d Dep’t 2006)) – Confirmed that one party’s inconsistent conduct plus the other’s acquiescence can establish abandonment of contract.
Goldman v. White Plains Center for Nursing Care, LLC (896 N.Y.2d 173 (2008)) – Reiterated that clear and unambiguous written agreements are interpreted according to their plain terms without reference to extrinsic evidence.
Sport Rock Intl., Inc. v. American Casualty Co. (65 A.D.3d 12 (N.Y. App. Div. 1st Dep’t 2009)) – Guided the court on priority among multiple insurance policies via “other insurance” clauses.

2. Legal Reasoning

a. Volunteer as Insured: The ANI policy’s Business Auto Coverage form defined “insured” categories in three subsections (a), (b) and (c). An endorsement then expanded the definition to include “anyone volunteering services to [JFS] … while using a covered auto … to transport [JFS] clients.”

By examining the “Agreement for Professional Services” between the County and JFS, the court concluded:

JFS bore recruiting, training, licensing, insurance, vehicle maintenance and reimbursement duties for volunteer drivers, unambiguously labeling them “the Agency’s volunteers.”
Contrary to ANI’s suggestion, occasional references to “volunteers” without the possessive descriptor did not create two volunteer classes or ambiguity.
Actions by the County to perform certain administration tasks did not amount to mutual, unequivocal conduct abandoning the Agreement. The parties continued to operate under it and even renewed it days before the accident.

Thus, Hyde was indisputably a JFS volunteer under the endorsement and an insured. Subsection (c) of the policy then explicitly covered “anyone liable for the conduct of an insured,” bringing the County within the policy’s insured definition to the extent of its vicarious liability.

b. Priority of Coverage: The County possessed a second, separate automobile liability policy from NYMIR. Both policies contained nearly identical “other insurance” provisions, except that the ANI policy stated it was “primary for any liability assumed under an ‘insured contract.’”

While the County’s contract with JFS potentially could belong to its own “insured contract” insurance, the court observed that the County’s status as an insured did not derive from any assumption of contractual liability but from the core policy language and endorsement definitions. Because the liability in question was not “assumed under an insured contract” but was direct vicarious liability for an insured’s actions, the special primacy clause did not apply. Consequently, the ANI and NYMIR policies stood on equal footing as co-excess insurers.

3. Impact

This decision clarifies two significant insurance-law points:

Nonprofit endorsements that extend coverage to volunteers will be enforced according to their clear written terms, even if volunteers also assist public entities under cooperative arrangements.
“Other insurance” clauses preferring coverage for “insured contracts” will not override standard priority rules when the insured status derives from endorsement definitions rather than an express assumption of contractual liability.

In practice, municipalities and nonprofits must carefully draft service agreements and endorsements to align responsibilities with insurance coverage and to avoid surprise coverage gaps or disputes over policy primacy.

Complex Concepts Simplified

Endorsement: An amendment to an insurance policy that modifies its coverage terms or definitions. Here, it broadened “insured” to include JFS volunteers using their own vehicles for nonprofit business.

Insured Contract: A contract under which one party assumes another’s liability for third-party injuries or damage. Insurance policies often specify special treatment (e.g., primacy) when liability arises from such contracts.

Other Insurance Clause: Policy language dictating how coverage interacts with other policies covering the same risk, often establishing primary, excess, or pro rata responsibilities among insurers.

Abandonment of Contract: A rarely found doctrine requiring clear, mutual, and unequivocal conduct by both parties that demonstrates they no longer consider themselves bound by their written agreement.

Conclusion

County of Ulster v. Alliance of Nonprofits reaffirms that unambiguous volunteer-coverage endorsements must be enforced as written and that vicarious liability for the conduct of an insured volunteer will extend coverage to public entities working with nonprofits. It further underscores that “other insurance” clauses granting primacy for “insured contracts” do not capture situations where coverage arises under core policy definitions rather than a distinct assumption of contract-based liability. This ruling will guide future drafting of service agreements and insurance endorsements, ensuring clarity in volunteer programs and inter-organizational risk management.