In a recent Pennsylvania Supreme Court decision, the Court highlighted the ambiguity inherent in the use of definite and indefinite articles when associated with the term “insured”. In Mutual Benefit Ins. Co. v. Politsopoulos, et al., a restaurant leased space from property owners. An employee of the restaurant was injured when she fell on an outside set of stairs, and sued the property owners. The property owners, additional insureds under the restaurant’s insurance policy, sought defense and indemnity under the policy. The insurance carrier disclaimed coverage under the employer liability exclusion. The policy in this case included a “Separation of Insureds” clause which provided, subject to exceptions, that the policy applied separately to each insured against whom a claim had been made. At issue in this case is that the employee in the underlying action was not an employee of the property owners thus, the issue turned on the phrase “the insured”.

The Court found that the policy’s varying use of the definite “the insured” with the indefinite “any insured” created ambiguity in the exclusionary language. Because of the interchangeable use of the definite and indefinite throughout the policy, the Court found that as applicable to the exclusion, the term “the insured” could reasonably be taken as signifying the particular insured against whom the claim is asserted, thus, the employee exclusion did not exclude coverage for a non-employee of an additional insured.  Added attention to detail in the underwriting process could have avoided this scenario for the insurer.  Please email Brian Gibbons with any questions. Thanks to Tiffany Davis for her contribution.