Volunteer Drivers as Insureds under RRG Policies and Co-Excess Coverage Allocation

Introduction

County of Ulster, New York State Local Government Services Foundation Inc. (as attorney-in-fact for New York Municipal Insurance Reciprocal), and New York Municipal Insurance Reciprocal (“the County”) sought a declaration that the Alliance of Nonprofits for Insurance Risk Retention Group (“ANI”) must cover the County’s liability in an underlying tort suit. The dispute arose after a head-on collision in January 2018 between a volunteer driver, Barbara Hyde, carrying a senior transportation program passenger and a County-owned bus. Hyde died and the passenger, Joyce Northacker, was injured. Northacker sued the County and other defendants in state court. The County then asked the federal district court for a declaratory judgment that a volunteer-driver endorsement in ANI’s Risk Retention Group policy (the “ANI Policy”) covered the County’s exposure. ANI counterclaimed for a declaration of no coverage. The district court granted summary judgment for the County; this appeal followed.

Summary of the Judgment

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

Insured Status: Under the unambiguous “Agreement for Professional Services” between the County and Jewish Family Services of Ulster County (JFS), Hyde was a JFS volunteer and therefore an “insured” under the volunteer-endorsement of the ANI Policy. By operation of the Policy’s “Who is an Insured” clause, the County also became an insured to the extent it is liable for Hyde’s conduct.
Allocation of Coverage: The ANI Policy’s “Other Insurance” clause makes its coverage primary only when liability is assumed under an “insured contract.” Because the County’s insured status flows directly from the Policy endorsement rather than a distinct indemnification obligation, the ANI Policy and the County’s separate NYMIR policy are co-excess rather than one being primary.
The case was remanded for further proceedings consistent with these rulings.

Analysis

Precedents Cited

Goldman v. White Plains Center for Nursing Care, LLC (896 N.Y.2d 173): Reinforced that a clear, complete, unambiguous contract must be enforced according to its plain meaning, without resort to extrinsic evidence.
EMF General Contracting Corp. v. Bisbee (6 A.D.3d 45): Defined the high standard for contract abandonment by conduct—it must be mutual, unequivocal, and inconsistent with intent to remain bound.
Sport Rock International, Inc. v. American Casualty Co. of Reading, Pa. (65 A.D.3d 12): Established that when multiple policies cover the same risk at the same level, priority is determined by comparing “Other Insurance” clauses.
Byrne v. Rutledge (623 F.3d 46): Set forth the standard of review for summary judgment in the Second Circuit—no genuine issue of material fact and entitlement to judgment as a matter of law.

Legal Reasoning

1. Volunteer Endorsement and “Who Is an Insured.” The ANI Policy’s business auto coverage applies to all sums an insured must pay for bodily injury or property damage. A specific endorsement extends the definition of “insured” to “anyone volunteering services to [JFS] while using a covered auto . . . to transport [JFS] clients or other persons.” The controlling “Agreement for Professional Services” between the County and JFS assigned volunteer recruitment, training, licensing verification, insurance and maintenance duties to JFS and repeatedly described drivers as “the Agency’s volunteers.” The court held this language unambiguous, rejecting ANI’s attempt to treat the County as the sole volunteer host or to argue that the County abandoned the contract by assuming some administrative duties.

2. Extension to the County. After concluding Hyde was an insured volunteer, the court turned to subsection (c) of the Policy’s “Who is an Insured” clause, which covers “anyone liable for the conduct of an insured described above.” An endorsement that broadens the insured categories becomes part of the core definition, so the County, as a party vicariously liable for Hyde’s conduct, is itself an insured under the ANI Policy.

3. Priority of Coverage. Both the ANI Policy and the County’s separate NYMIR policy contain nearly identical “Other Insurance” clauses, except that the ANI clause declares the ANI Policy primary when liability is assumed under an “insured contract.” Because the County’s insured status derives directly from the Policy’s endorsement rather than a separate indemnity obligation in a distinct contract, the court concluded there is no “insured contract” trigger. Consequently, the two policies stand as co-excess layers of coverage.

Impact

This decision clarifies two important points in insurance law:

Volunteer Endorsements: When an RRG policy contains a clear endorsement covering volunteers of a named insured, municipalities or other principals can themselves qualify as insureds under the policy to the extent of vicarious liability.
Other Insurance Clauses: Policies that make themselves primary only over coverage “assumed under an insured contract” must strictly apply that limitation. Coverage arising directly from policy endorsements does not activate a primary-contract exception, yielding co-excess results.

Insurers and insureds will adjust policy drafting and risk analysis accordingly: volunteer-endorsement language will be scrutinized for its spillover effects, and other-insurance formulations will be calibrated to produce intended priority results.

Complex Concepts Simplified

Risk Retention Group (RRG): An insurer formed under federal law that pools risk for member organizations in similar industries or activities.
Volunteer Endorsement: A policy addition that expressly extends coverage to individuals performing volunteer services for the named insured.
“Other Insurance” Clause: A provision that explains how coverage overlaps are to be allocated among multiple policies covering the same loss.
Co-Excess Coverage: A result in which two policies share liability after primary coverage has been exhausted, without one being deemed primary over the other.
Summary Order: A non-precedential appellate decision that resolves an appeal without a full opinion but still governs the parties.

Conclusion

County of Ulster v. Alliance of Nonprofits for Insurance Risk Retention Group establishes that a volunteer-driver endorsement in an RRG policy can convert a municipal principal into an insured for volunteer-related liability. It also demonstrates the strict application of “insured contract” limitations in other-insurance clauses, producing co-excess rather than primary coverage. This ruling will guide insurers in drafting volunteer endorsements and other-insurance provisions, and inform courts in resolving overlapping policy disputes.