“Any Insured” Exclusion Applies to All Insureds

A New York appellate has rendered an opinion on an exclusion in a liability policy pertaining to “any insured”. This case is Howard & Norman Baker, Ltd. V. American Safety Casualty Insurance Company, 2010 NY Slip Op 06077 (July 13, 2010). Note that this opinion is subject to revision before publication in the Official Reports.

American Safety Casualty Insurance Company issued a general liability policy to Point Recycling, a tenant in a building owned by Howard & Norman Baker, Ltd.; as required by lease, Howard & Norman Baker (HNB) was listed as an additional insured in the policy. Ruiz, an employee of Point Recycling, was injured in the building and sued HNB and HNB forwarded the lawsuit to American for defense and indemnity. American denied coverage on the ground that the policy contained an exclusion for bodily injury to “an employee of any insured arising from and in the course of employment by any insured”.

HNB commenced this action against American seeking a judgment that the insurer had an obligation to defend and indemnify. At trial, American requested that the court search the record and award it summary judgment. The court denied the request and American appealed.

The Supreme Court of New York, Appellate Division, Second Judicial Department, reviewed the facts of the case and the policy language. The court stated that an insurer's duty to defend is not triggered when the only possible interpretation of the allegations against the insured is that the factual predicate for the claim falls wholly within a policy exclusion; and, an exclusion must be specific and clear in order to be enforced. In this instance, the plain meaning of the exclusion invoked by the insurer was that the policy did not provide coverage for damages arising out of bodily injury sustained by an employee of any insured in the course of employment. Despite the separation of insureds clause (severability clause), the exclusion's reference to “any insured” makes it unmistakably clear that the exclusion is not limited to injuries sustained by HNB's employees. Accordingly, since Ruiz was an employee of one of the insureds, his injury was not covered under the terms of the policy.

The appellate court ruled that the trial court should have granted American's application to search the record and award it summary judgment declaring that it had no duty to defend or indemnify HNB in the underlying action. The matter was remitted to the trial court for the entry of such a judgment.

Editors Note: There are many coverage disputes between insureds and insurers over exclusions that use the phrase “any insured”. Does it mean that if an exclusion applies to any insured, then all insureds are denied coverage? The separation of insureds clause does state that the insurance applies separately to each insured against whom a claim or lawsuit is brought, but the word “any” is a generalized term that encompasses every person or thing in the same category. Moreover, insurers do differentiate in policy exclusions, using the phrases “the insured”, “that insured” and “the named insured (you or your)” in order to specifically apply the exclusion to a particular person or organization. So, if the insurer uses a generalized term like “any insured” in an exclusion, the meaning is that the exclusion is applicable to all insureds. This New York court ruled that way but the issue is far from settled law.