The New Jersey Appellate Division in Essex v. Pine Towers Group, recently analyzed whether a CGL policy of insurance issued to a general contractor provided coverage for an action seeking damages for bodily injuries to an employee of a subcontractor.

Pine Towers (“Pine”) was the general contractor for a construction project in Newark and was issued a policy of general liability insurance underwritten by Essex Insurance Company (“Essex”). Pine hired FM Home Improvement, Inc. (“FM”) who, in turn, hired Brothers Home Construction (“Brothers”) to install siding. One of Brothers’ employees was injured when he fell through an opening in a scaffold, which he alleged was hazardous and dangerous. Pine sought coverage for these claims from Essex. Essex denied the claim for coverage.

The trial court found that Pine was entitled to coverage as an additional insured under the policy of insurance issued to FM. However, it also found that the Essex policy excluded coverage because of an endorsement barred coverage for bodily injury sustained by any contractor, subcontractor or their employees.

The Appellate Division upheld the trial court’s denial of coverage under the Essex policy. The Essex policy contained an “Additional Conditions Endorsement,” which required Pine’s contractors and subcontractors to maintain minimum commercial general liability coverage. While failure to comply with this provision would not void coverage, it did reduce the limits of liability. These two paragraphs were interpreted by the Court to apply to contractors that were in privity with Pine. The third paragraph of the endorsement stated that there would be no coverage for “bodily injury” sustained by any contractor, subcontractor or their employees.

Pine argued that the subject provision was ambiguous, and should only apply to exclude coverage for claims of bodily injury by contractors that were in privity with Pine, that is, those that Pine contracted with as opposed to the subcontractors of Pine’s subcontractors. Pine also argued that the condition barring coverage for subcontractors did not apply as it was intended only to protect Essex from covering workers compensation claims. The Appellate Division disagreed finding that the clear intent of the third-paragraph was to limit the insurer’s exposure to all claims for “bodily injury” asserted by any contractors and subcontractors. Therefore, the lower court properly denied coverage under the Essex policy.

Thanks to Andrew Marra for his contribution to this post. If you have any questions or comments, please email Paul at