The Eleventh Circuit recently held that a standard employee exclusion in a liability policy bars coverage to an additional insured where the injured claimant is a “statutory employee” of the additional insured for purposes of workers’ compensation law, even if the injured claimant is not technically employed by the additional insured.
The estate of an employee of a third-tier subcontractor on a construction project sued the project’s general contractor after the employee fell at the construction site and died as a result. The general contractor tendered its defense and indemnity to its first-tier subcontractor as an additional insured under the policy. The insurer denied coverage based on the policy’s standard employee exclusion. In the ensuing declaratory judgment action, the court held that the employee exclusion barred additional insured coverage for the general contractor because although the decedent was not the general contractor’s employee in the traditional sense, he was a “statutory employee” of the general contractor for purposes of the workers compensation law. The court noted that its interpretation of the exclusion was consistent with the purpose of CGL policies, which exist to provide insurance coverage for injuries that occur to the public-at-large.
The Eleventh Circuit’s ruling is significant because it continues the debate about whether standard employee exclusions apply to additional insureds. Indeed, the same week the Eleventh Circuit issued its decision in Amerisure, an appellate court in Michigan reached the opposite conclusion. In Hobbs v. Shingobee Bldrs., Inc., the court held that an employee exclusion identical to that at issue in Amerisure did not apply to an additional insured that did not employ the injured claimant.
For a copy of the decision, click here.