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Insurance Law

Ten Most Significant Insurance Coverage Decisions Of 2013 – Eleventh Circuit Limits Construction Site Bodily Injury Exposure (Without Using An Endorsement)

Insurers have been taking various steps to attempt to limit their exposure for bodily injury claims on construction sites (not to mention for property damage). One way has been to amend the employer’s liability exclusion to preclude coverage for employees of “any insured” as opposed to “the insured.” In this way, coverage may not be owed to general contractors, that are additional insureds under policies issued to subcontractors, for injuries to employees of the subcontractor. This is a very common claim when there is a construction site injury. Since the amended exclusion precludes coverage for employees of “any insured,” and the general contractor is an “insured” (by way of an additional insured), no coverage is owed, even though the injured party is not an employee of the general contractor.

Another tack insurers have taken has been to add exclusions that preclude coverage for an employee of any contractor at the site, even if not an employee of a contractor hired by the insured.

This year the Eleventh Circuit demonstrated another method for insurers to limit their exposure for bodily injury claims on construction sites. However, its significance is that it requires no changes to standard policy language. In Amerisure Insurance Co. v. Orange and Blue Construction, Inc., No. 13-10313, 2013 U.S. App. LEXIS 22475 (11th Cir. Nov. 4, 2013) [enhanced version available to subscribers], the Eleventh Circuit held that the employer’s liability exclusion applied to preclude coverage for Epoch Properties, a general contractor, under a policy issued to a subcontractor, for an injury sustained by an employee of another subcontractor. The employee killed on the construction site was employed by a contractor that was three tiers removed from the general contractor.

Not surprisingly, Epoch, the general contractor, argued that the employer’s liability exclusion did not apply because it excluded coverage for bodily injury to an employee of “the insured” and the decedent, three tiers removed, was hardly an employee of the GC-insured. In other words, at issue was a typical (non-amended) employer’s liability exclusion that was tied to an employee of “the insured,” i.e. an employee of “the insured seeking coverage.”

But the court was not persuaded that the employer’s liability exclusion was so limited. The Eleventh Circuit held that “[a]lthough Mr. Tejeda may not have been one of Epoch’s employees in the traditional sense, Mr. Tejeda was a ‘statutory employee’ of Epoch for purposes of workers’ compensation law. . . . Because Mr. Tejeda was one of Epoch’s statutory employees and was injured during the course of his employment, Amerisure had no duty to defend or indemnify Epoch against his Estate.”

In other words, a typical (non-amended) employer’s liability exclusion, that was tied to an employee of “the insured,” was treated as if it were an amended exclusion that applied to an employee of “any insured.”

The Appeals Court explained its decision as follows: “Our interpretation of the CGL policy is consistent with the purpose of commercial general liability policies like this one. Unlike worker’s compensation insurance or employer’s liability insurance, which exist to provide employers with coverage for injuries that occur to employees during the scope of employment, the sole purpose of commercial general liability insurance is to provide coverage for injuries that occur to the public-at-large. . . . Because the terms of the CGL policy did not cover injuries to Epoch’s employees or the employees of Epoch’s subcontractors like Mr. Tejeda, Amerisure has no duty to indemnify or defend Epoch in this case.”

In general, a “statutory employee” is an employee of a subcontractor, who is deemed to be an employee of the general contractor, when he sustains bodily injury while acting within the scope of his employment. Even though a “statutory employee” is considered an employee of the general contractor for purposes of workers compensation, a few courts have held that the employee is also considered an employee of the general contractor for purposes of the employer’s liability exclusion. There are at least cases in Texas, Tennessee and Idaho (relying on the trial court decision in Orange and Blue) that have so held. But Orange and Blue Construction, coming from a Circuit Court of Appeals, adds weight to this body of law.

While lots of insurers have been using endorsements, to attempt to limit their bodily injury exposure on construction sites, Orange and Blue demonstrates a possible way to do so using the standard policy that is probably already in the insurers’ hands. Therein lies its significance.

Coverage Opinions is a bi-weekly (or more frequently) electronic newsletter reporting or providing commentary on just-issued decisions from courts nationally addressing insurance coverage disputes. Coverage Opinions focuses on decisions that concern numerous issues under commercial general liability and professional liability insurance policies. For more information visit

The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.

    Randy J. Maniloff is an attorney in the Philadelphia office of White and Williams, LLP.  He concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.

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