An Additional Insured May Not Be Covered for Employee Losses.   finger

We are going to go deep today, my friends, into arcane insurance policy interpretation.  We will discuss how two insurance clauses can influence each other in order to to deny coverage.

An additional insured by endorsement is an insured under the policy.  They are bound by all other policy terms and exclusions as is the named policyholder.  A standard exclusion in a CGL policy is for employee-related injuries.  This makes sense.   Since there is a product to protect a policy holder against this type of loss – workmens compensation insurance – there is no need to cover this risk in the standard CGL policy.

The language of the Employer Liability clause states that the policy excludes coverage for  employer liability for injury to an employee of the insured, or for injuries that arose out of the employment of the insured.  As it relates to an additional insured, employee losses are likewise not covered under the policy.

However the policy typically has a separation of insureds clause.  This states that each insured is treated separately under the policy for coverage purposes.  The key word in the exclusion is  “the.”   Therefore if an employee of the named insured sues the additional insured for his injury, the additional insured is covered for this loss.  And it the employee of the additional insured sues the named insured for his injury, the named insured is covered for this loss.  But if an employee of the named insured sues the named insured, there is no coverage and the Employer Liability exclusion applies – and likewise for the additional insured.


Additional Insured Employee v. Additional Insured = No Coverage. 

See e.g., Atchison, Topeka and Santa Fe Ry. Co. v. St. Paul Surplus Lines Ins., 328 Ill. App. 3d 711, 767 N.E.2d 827 (Ill. App. 1 Dist. I Div. 2002) (claims made by the employee of an additional insured railroad, against that railroad, are precluded from coverage) and Employer’s Liability Assurance Corp. v. Travelers, Ins. Co., 411 F.2d 862, 865-66 (2d Cir. 1969) (the exclusion under
the policy as to employees of the insured is confined to the employee of the
insured who seeks protection under the policy).    

Named Insured Employee v.  Additional Insured = Coverage. 

See Sacharko v. Ctr. Equities Ltd. P’ship, 2 Conn. App. 439, 443, 479 A.2d 1219, 1222 (1984) (a suit by the named insured’s employee against an additional insured under the policy is protected from the employee exclusion clause).