In the construction industry, higher-tier contractors (such as general contractors) frequently require their subcontractors to name them as additional insureds on the subcontractor’s liability insurance policies. When an employee of the subcontractor is injured on the job, the employee may bring a claim against the general contractor for failure to supervise the worksite or similar claims. Whether the employee’s bodily injury claim against the general contractor is covered by the subcontractor’s general liability policy will be predicated in large part on the specific form of the Employers Liability Exclusion found in the subcontractor’s policy. Additional insureds usually argue that such an exclusion applies only to bar coverage for the actual employer of the injured employee (i.e. the named insured-subcontractor), particularly where the policy contains a separation of insureds provision. Insurers, however, contend that the exclusion should preclude coverage for all insureds (including the additional insureds).
Recently, in Vivify Construction, LLC v. Nautilus Ins. Co., the Illinois Court of Appeals addressed a particularly broad exclusion, which precluded coverage for bodily injury to the employees of any insured arising out of employment by any insured or where the injured party was performing duties related to any insured’s business, and further precluded coverage for injuries sustained by any insured’s subcontractor’s employees. Vivify Construction, LLC v. Nautilus Ins. Co., -- N.E.3d --, 2017 IL App (1st) 170192, 2018 WL 562049 (Jan. 24, 2018). Finding the phrase “any insured” to be unambiguous, the court rejected the additional insured’s attempt to present extrinsic evidence concerning the meaning of the policy provisions and their application to the insurer’s duty to defend. Id. at *4-*5. The court held that the exclusion at issue unambiguously precluded coverage where the additional insured was sued for the injury of one of its subcontractor’s employees. Id. at *5. The court further rejected application of the separation of insureds provision, finding it had no material impact on the exclusion at issue. Id. at *6.
Other courts reject the application of the Employers Liability Exclusion to an additional insured being sued by the named insured’s employee, particularly where the policy at issue uses the phrase “the insured” as opposed to the phrase “any insured.” See Travelers Ins. Co. v. Auto-Owners Mut) Ins. Co., 203 N.E.2d 846, 850 (Ohio Ct. App. 1964) (“Since the claimant is not an employee of the assured against whom the claim is asserted, the employee-exclusion clause of appellant’s policy does not affect its liability.”); see also Mut. Benefit Ins. Co. v. Politsopoulos, 115 A.3d 844, 854 (Pa. 2015) (holding that employer’s liability exclusion was inapplicable when the claimant was an employee of the named insured, not the additional insured seeking coverage). General contractors and others seeking additional insured status are well-advised to review the named insured’s policy, and analyze whether the Employers Liability Exclusion within it will protect them in the event of an injury to the named insured’s employee.