Pennsylvania Court Applies Employer’s Liability Exclusion

In Nationwide Mut. Ins. Co. v. Rainone, the Philadelphia County Court of Common Pleas addressed whether an insurer had a duty to defend and indemnify its insured, Sunco, in an underlying action commenced by one of its employees.

In the underlying action, the plaintiff, an employee of Sunco, alleged that her manager inappropriately touched her, and sued Sunco and the manager for negligence, negligent infliction of emotional distress, negligent hiring and failure to supervise.

In its declaratory judgment action, Nationwide argued that the policy’s employer’s liability exclusion barred coverage.  The policy’s employer’s liability exclusion stated, that no coverage was provided under the policy for bodily injury sustained by an employee while performing duties related to the conduct of the insured’s business or arising out of employment by the insured.

The court noted that in Pennsylvania, if the employee’s alleged injuries occurred within the proximate time of work, the exclusion would act as a bar to coverage.  Since the plaintiff was allegedly injured while “on the clock,” the exclusion applied.  The court held that the insurer had no duty to defend or indemnify the insured in the underlying action.

Depending on the factual circumstances of a case, the employer’s liability exclusion could provide a strong basis for an insurer to disclaim coverage.

Thanks to Colleen Hayes for her contribution to this post.