For much of the excess and surplus lines world, employer’s liability exclusions are THE way that insurers manage their risk (given the nominal premiums that are charged). The standard employer’s liability exclusion wording bars from coverage all claims arising out of “bodily injury” to an “employee” of “the insured.” In Pennsylvania, insurers had often attempted to use this phrasing to bar coverage for employee personal injury lawsuits to both named insureds and additional insureds. Such efforts will no longer be countenanced.

In the case of Mutual Benefit Insurance Company v. Christos Politsopoulos, et al., Politsopoulos leased commercial space to Leola Restaurant, Mutual Benefit’s insured. The Mutual Benefit policy had a blanket additional insured endorsement that (by virtue of a written contract between Leola and Politsopoulos) made Politsopoulos an additional insured under the policy. In December 2007, Marina Denovitz, a Leola employee, fell down a flight of stairs while working. She commenced a lawsuit against (among other) Politsopoulos on the basis that the stairs had been negligently maintained. Politsopoulos sought additional insured coverage from Mutual Benefit. Mutual Benefit disclaimed coverage on the grounds that the employer’s liability exclusion barred coverage to anyone seeking coverage under the Leola policy since Denovitz was an employee of Leola, “the insured.” In opposition, Politsopoulos argued that the Policy’s wording was ambiguous and by virtue of the Policy’s separation of insureds wording the employer’s liability exclusion’s was limited in applicability to Leola, as Denovitz was only an employee of “the insured.”

The trial court agreed and held that the use of the phrase “the insured” (as opposed to “any insured” or “the named insured”) was ambiguous and thus unenforceable when used to bar coverage to an additional insured. The Superior Court disagreed and reversed the trial court. The Superior Court held that (in effect) additional insureds were “named insureds.” The Supreme Court thereafter took the appeal.

In its decision reversing the trial court, the Supreme Court focused on the difference in the use of the definite (and restrictive) article “the” as opposed to the indefinite (and less restrictive) articles “an” or “any.” It held that the use of the phrase “the” insured is specific to the NAMED insured (that is the entity to which the policy was issued) and does not bar coverage to additional insureds.

The decision, although it does restrict the potential scope of the standard employer’s liability exclusion, does not void or otherwise nullify the more aggressive employer’s liability exclusions found in many excess and surplus lines policies. So, to our mind, while much ink is being spilled on the decision, it does not really move the proverbial meter. If you want to bar coverage for on the job injuries, simply use “any” and not “the.”

If you have any questions about this post, please e-mail Bob.