First Department Holds That Insurance Procurement Requirement Was Breached By Purchase of Policy With Self-Insured Retention

In Spector v. Cushman & Wakefield, Inc., OneSource Facility Services, Inc. was contractually obligated to procure insurance with limits of $1,000,000 per occurrence naming Citibank as additional insured.  OneSource procured a policy with per occurrence limits of $1,500,000 with a $500,000 self-insured retention.  Although it was not prohibited by the OneSource/Citibank agreement from procuring a policy with a self-insured retention, OneSource was obligated to notify Citibank of this fact by certificate of insurance, which it failed to do.  As such, the First Department affirmed a finding that OneSource had breached its contract with  Citibank.  In so holding, the Court cited to its earlier decision in Federated Retail Holdings v. Weatherly 39th St. LLC, in which the Court recognized that to hold otherwise would permit a "tenant [to] simply choose to buy a policy with such a high self-insured retention (and concomitantly low premium) as to render insubstantial or even illusory the benefits of the insurance coverage for which landlord bargained."