Introduction

 

Apart from allegations over construction defects, the leading disputes dealing with construction work involve suits brought by employees of contractors who are injured and seek damages for alleged liability caused by project owners and/or other contractors. Since, as a general rule, workers compensation statutes preclude injured employees from bringing suits against their own employers (other than for intentional torts), those injured seek out other parties from whom the payment of damages are possible for their work-related injuries. When an injured employee files suit against some third party, such as a project owner or general contractor, the third party will often sue the employer for being at least partially at fault. These kinds of suits are commonly referred to as “third party actions” or “third party over actions.”

 

An example of a third party over action is where an employee is injured while using scaffolding where the employer (general contractor) has permitted a safety guard to be removed. The injured employee sues the manufacturer of the scaffolding because the safety guard could be removed. The manufacturer then sues the employer (general contractor) alleging sole or partial fault because the employer permitted the scaffolding to be operated in an unsafe condition.

 

Whether an injured employee can bring a suit against an allegedly negligent third party hinges on what the law permits. Most workers compensation statutes permit an injured employee to seek damages from an allegedly negligent third party even after the injured employee has collected statutory workers compensation benefits. Those state statutes not in that category where injured employees collect workers compensation insurance and then bring suit against an alleged third party are Maine, Minnesota, New Mexico, and South Dakota. In the latter states, it is an either or situation. If the injured employee collects workers compensation benefits, he or she cannot then decide to also sue a third party. Likewise, an injured employee who brings suit cannot later file for statutory benefits. Since there may be some unique requirements or exceptions, it is advisable to review the statute in question. It is important to keep in mind also that whatever approach is permitted in seeking damages, the injured employee will have to repay the workers compensation benefits, because insurers of workers compensation insurance have a standing lien on their payments. This means that the damages have to be worth more than the benefits, because litigating these issues can be expensive.

 

Seeking Ways to Obtain Protection against Suits

 

The two general ways in which third parties such as project owners and general contractors seek to obtain protection when suits are filed against them by injured employees of other contractors are by requiring: (1) a contractual liability agreement, or (2) additional insured coverage. Sometimes both are required in case one does not apply for some reason. This is known as the belt or suspenders concept. In light of the differences between contractual liability and additional insured coverage, they are discussed separately.

 

Contractual Liability

 

For purposes of discussing contractual liability coverage, two terms are commonly used to described the parties: (1) indemnitee and (2) indemnitor. The indemnitee is the party who requires that it be defended, held harmless and indemnified for a covered claim or suit. The party who has the obligation to provide defense and indemnity is the indemnitor.

 

In order to obtain protection against suit by an injured employee in a third party over action, an indemnitee must essentially require coverage that will apply to the indemnitee's sole fault because an injured employee cannot file suit against his or her employer. The problem is that many state's anti-indemnity statutes do not permit the indemnitors' assumption of the indemnitees' sole fault. Even if indemnitees are permitted and can require the financial consequences of their sole negligence, they often do not. Theyfeel they should be held harmless for the acts or omissions of indemnitors that result in injury or damage to others, and the indemnitees are responsible for what injury or damage they cause. If one were to look closely at this kind of an arrangement, it is common law indemnity, since no tort liability is being assumed by either party. This means, in effect, that contractual liability coverage does not apply, since there is no transfer of tort liability. Yet, when one reviews bid specifications, the insurance required also includes contractual liability. It is not until an indemnitee is sued by an indemnitor's injured employee that the indemnitee first realizes what it has done and what could have been done to avoid the situation.Even if, for the sake of argument, an indemnitee were legally permitted to require the transfer of the financial consequences of its sole fault, the indemnitor's CGL policy could still be amended to preclude sole fault coverage. This is possible with the issuance of one of two contractual limiting endorsements.

 

The first endorsement is Contractual Liability Limitation endorsement CG 21 39, which was introduced in 1988. When this endorsement is issued, it effectuallylimits coverage to liability assumed under the defined term “insured contract.” These are contracts involving what can be categorized as the acronym L-E-A-S-E: L – leases; E – easements; A – agreement required by municipalities other than those involving work for municipalities; S – sidetrack agreements involving railroads; and E – elevator maintenance agreements. While these kinds of contracts can involve tort liability assumed, they do not involve the kind of tort liability assumed coverage that is sought by project owners and/or general contractors to protect themselves in third party over actions.

 

The second endorsement is Amendment of Insured Contract Definition CG 24 26, which was introduced in 2004. It is a tool for underwriters who want to exclude coverage for tort liability assumed under a contract (other than those contracts specifically listed under paragraphs a. through e. of the policy definition of insured contract. In other words, contracts comprising the acronym L-E-A-S-E. ) The effect of this endorsement is to rule out any hope for sole fault coverage of the indemnitee, because there must be partial fault of the indemnitor to activate coverage. Of course, it is possible to activate this coverage when courts rule indemnitors of being at least one percent at fault. When this happens, the indemnitee is fully covered despite this kind of an endorsement.

 

Defenses of Employers against Assumed Liability

 

Indemnitees should know that once workers compensation benefits are paid or become payable, the employer becomes immune from any obligations to pay additional sums to its employees or to anyone else. This system was initially viewed as a compromise between an employer's need of freedom from fault in the workplace and the employee's concern for safety and prompt and certain relief in the event of injury.

 

However, indemnitees who commonly attempt to transfer risk by contract do not usually anticipate that the assumption of liability by indemnitors may not constitute a waiver of an indemnitor's statutory immunity. Few contracts specifically require that the indemnitor waive its statutory immunity as to the indemnitee. If that is not done, however, when the indemnitee seeks indemnity, the indemnitor (employer) may seek to raise the sole and exclusive remedy doctrine as a shield to avoid an indemnity obligation in a third party over action.

 

While not exhaustive, research on this subject reveals that only a minority of statutes hold that an employer who voluntarily agrees to indemnify a third party against whom an injured worker files an action, or waives that right, is not liable under the indemnity agreement. The state of Alabama is an example. Most statutes addressing waivers of immunity specifically state that the employer will not be liable to any third party for indemnity in any action at law or otherwise. The statutes follow two different approaches. Some specifically state that an employer's immunity can be waived if done expressly in a written agreement. Others are silent about express waivers and it is by case law that statutes are interpreted to be an exclusive remedy, or held flexible enough to hold the employer liable for indemnity if agreed by contract.

 

One example of a statute referencing an express waiver is California's labor code which states in part that “the employer shall have no liability to reimburse or hold such third person harmless, in the absence of a written agreement to do so, executed prior to the injury.” In Easter v. Exxon Co., 699 S.W.2d 168 (Tenn. Ct. App. 1985), the court struggled over the applicability of waivers of the employers rights:

 

We now consider the statute. After reading and rereading it, we do not believe it could be reasonably construed to bar contractual indemnity on the basis that the statute sets forth the employer's liability and this liability cannot be extended even by agreement of the employer. If that were so, whenever an employer through contract with his employee agreed to do more for his employee than required by the worker's compensation law, such contract would be illegal and unenforceable. We decline to construe the statute and if courts from other states have so construed similar statutes, so be it, but we do not and we find no case by a Tennessee court which requires such construction.

 

One might ask: If it has been the tradition of workers compensation insurance to be the exclusive remedy against the employer (and sometimes fellow employees), why would a state permit waivers of such immunity either by specific exception or by interpretation? There are a number of reasons. Among them is that the courts do not want to interfere in the contractual relationships of businesses. If the indemnitor desires to voluntarily relinquish its statutory protection, it may do so, even though many indemnitors must either agree to waive their immunity expressly under contract or lose the prospects of a job. This, of course, presumes that such waivers do not imperil the underlying rationale of protecting the workers' rights to compensation for their injuries. Those employers who waive their immunity may still be able to shift most, if not all, of the potential impact of their contracts to insurers. In fact, many contracts of indemnity require that certain kinds of insurance be maintained so as to contractually allocate the burden of potential loss to insurers. This system of loss distribution also supports those who either voluntarily or reluctantly give up their protection in exchange for the prospects of business.

 

Specificity Is the Problem

 

Whether the right of an employer to expressly waive its immunity under workers compensation is clearly granted by statute or case law must be known by indemnitees as they prepare their written contracts of indemnification. The major obstacle, and the reason for an increase in litigation on this subject, concerns the specificity of a waiver in relation to the applicable statute section or case law. If a statute requires that the express waiver be clear and unequivocal without giving guidance to the kind of terminology necessary to satisfy the law, the result must be trial and error.

 

Thus, for example, the fact that Pennsylvania's statute permits express waivers does not mean that they necessarily will be viewed as such. Much depends on the facts and the contractual terms in question. A case in point is Bester v. Essex Crane Rental Corp., 619 A. 2d 304 (Pa. Super 1993), where the court denied an indemnity claim. This case involved an indemnitee who claimed protection from liability for injuries to one of the indemnitor's employees that may have been caused by the indemnitee. The pertinent provision of the indemnification clause read:

 

The Lessee shall defend, indemnify and hold forever harmless Lessor against all loss, negligence, damage, expense, penalty, legal fees and costs, arising from any action on account of personal injury or damage to property occasioned by the operation, maintenance, handling, storage, erection, dismantling or transportation of any Equipment while in your possession.

 

The court denied this indemnity claim because the agreement to indemnify contained no express waiver of the protection granted by the workers compensation act, and did not even contain a reference to the waiver.

 

However, in the later Pennsylvania case of Kiewit Eastern Co., Inc. v. L & R Construction Co., Inc., 44 F.3d 1194 (U.S. Ct. App. 3d Cir. 1995), the court held that an indemnification agreement referencing workers compensation statutes sufficiently waived the immunity granted to employers under this state's workers compensation act.

 

One of the arguments over the indemnity wording involved in the above noted case raised by the subcontractor's insurer was that the subcontractor was immune from liability for injuries to its employees based on the workers compensation act which provides that the “liability of an employer under this act shall be exclusive and in place of any and all other liability to such employees. . . .” Although this state's statute immunizes employers from indemnification suits by third parties who have been sued by injured employees, the court pointed to the law's exception reading: “unless liability for such damages. . . shall be expressly provided for in a written contract entered into by the party alleged to be liable to the date of the occurrence which gave rise to the action.”

 

The subcontractor's insurer, in this case, argued that, while the law made an exception for express waivers, the last sentence of the indemnity agreement did not ”expressly provide” that the subcontractor would waive its immunity, as the statute required. The insurer, however, was overruled by the court which held that the language of the subcontract was a sufficient waiver to permit indemnity.

 

Over time and through trial and error, legal counsel representing those seeking to obtain waivers of others' immunity may be able to determine appropriate wording that will effect satisfactory waivers from the standpoint of the law. The law of Ohio, for example, appears to have been tested enough times that the appropriate wording to effect an employer's immunity from suit is not a guess. In Ohio, specific reference to the statute in question is necessary. The law states, “The party expressly waives its statutory and constitutional immunity, as codified in Article II, Section 35 of the Ohio Constitution and at Ohio Revised Code 4123.74, as an employer in compliance with Ohio workers compensation.”

 

Among those states that have permitted waivers of immunity by specific exception to statutes, or by case law in addition to those mentioned (Alabama, California, Ohio, Pennsylvania, and Tennessee) are Colorado, Delaware, Georgia, Hawaii, Maine, Mississippi, Montana, Nevada, New Mexico, North Carolina, Oklahoma, Texas, and Washington.

 

So, it may be possible for an indemnitor (or its insurer) to avoid incurring the costs of defending an indemnitee, despite a broad hold harmless agreement when no waiver of immunity applies. In fact, it may come as a surprise to the indemnitee and its legal counsel who might have drafted the hold harmless agreement to learn about this waiver of immunity when it is raised by the indemnitor as a matter of defense.

 

Even if an insurer has to cover the contractual liability of an indemnitee, it is important to point out that the insurer may not have to provide defense as required in a contract, thus causing the indemnitor to be confronted with a breach of contract. This often happens because hold harmless agreements usually contain a provision stating to the effect that the indemnitor agrees to defend the indemnitee. This promise often is breached when the indemnitor's CGL policy makes defense contingent on certain conditions that are seldom met. Take the standard ISO CGL policy for example. This policy states under Supplementary Payments – Coverages A and B that if the insurer defends an insured against a suit and an indemnitee is also named as a party to the suit, the insurer will defend that indemnitee if all of the six conditions (with one condition consisting of six additional parts) are met. This provision is destined to fail in a third party over action because the insured is not likely to be named as such in a suit so that the insurer does not have to defend its insured. This means that the indemnitee must defend itself and then obtain reimbursement of its “reasonable costs” from the indemnitor's insurer. (Apart from third party over actions, when the indemnitor's insurer is required to defend an indemnitee who has met all of the Supplementary Payments conditions, defense costs would be in addition to limits.)

 

If the indemnitor therefore agreed to hold harmless, defend and indemnify the indemnitee, it stands to reason that the indemnitor's insurer has no obligation to provide defense to the indemnitee, despite the indemnitor's promise. This can be a serious infraction of the agreement as failure to procure coverage as promised is not insurable under a CGL policy.

 

Additional Insured Coverage

 

Most indemnitees likely require a hold harmless agreement as well as additional insured coverage. The reasons are that, unlike contractual liability coverage, being an additional insured provides the insured with the right of defense without all of those conditions applicable to contractual liability. Also, the cost and expenses to provide additional insured coverage are in addition to policy limits. This is unlike contractual liability where the damages are within limits if the insurer has no obligation to provide defense, such as in third party over actions.

 

Much has been written on additional insured endorsements and the changes in language of standard ISO endorsements implemented in 2004 and 2013. Because court cases on these endorsements take several years, many of the discussions over these endorsements have focused on contrasting the language of previous and current editions. What has been anticipated above all else, however, is how the courts are going to view the language of both the additional insured and contractual liability endorsements that provide coverage for liability only when injury or damage is “caused in whole or in part” by the named insured or the indemnitor. This wording attempts to eliminate coverage for the sole fault of the additional insured and/or indemnitee. The named insured and/or indemnitor, in other words, has to be at least partially at fault before the coverage is triggered.

 

An important question is: What about obtaining defense in the interim for the additional insured? Given that the employer of an injured employee will not be named in a suit involving a third party over action filed by its employee, the question becomes whether the insurer is obligated to defend the project owner and/or general contractor (against whom suit is filed), since the 2004 and 2013 additional insured endorsements required that the bodily injury be caused in whole or in part by the named insured who, in this case, is the subcontractor (employer).

 

Now that the language applicable to the 2004 endorsements is finding its way into the court system, anticipated court decisions are coming to fruition. Given the varying fact patterns and influences of state laws, the decisions now being made by the courts on this issue of third party over actions are likely to be as controversial as the endorsements themselves.

 

Cases Holding for Coverage

 

A recent case is Gilbane Building Co. v. Admiral Ins. Co., 644 F.3d 589 (U.S. Ct. App. 5th Cir. 2011), which involved an appeal of Gilbane Building Co. v. Empire Steel Erectors, L.P., No. H-08-1707 (S.D. Tex. 2010), where the court held that the insurer had an obligation to provide defense for a third party over action. Interestingly on appeal, the court held that the insurer had to indemnify the additional insured but did not have any obligation to provide defense. For purposes of background information, Gilbane Building Co. v. Empire Steel Erectors is discussed here. This is followed by the conclusions of the appeal between Gilbane and Admiral Insurance Company.

 

In this case, an employee of a subcontractor was injured while climbing down a ladder at a construction site. The underlying contract between the parties called for the subcontractor to secure liability coverage naming the general contractor an additional insured. As a result of this incident, the employee sued the general contractor, among others, for his injuries, claiming negligence. The general contractor sent letters to both the subcontractor and its insurer requesting a defense and indemnification. The subcontractor's insurer refused to defend and indemnify the general contractor based on language in the complaint and the additional insured endorsement.

 

The general contractor then filed an action for declaratory relief seeking a declaration that it was an additional insured and that both the subcontractor and its insurer had breached their contractual obligations. The additional insured coverage provided by the subcontractor's policy required a written contract or written agreement that was an insured contract.The subcontractor and its insurer moved for summary judgment on the same issues. The court, in turn, focused on several issues, including ambiguity; whether the factual allegations supported a covered claim; duty on the part of the subcontractor to have its insurer defend the general contractor; and whether the underlying contract calling for additional insured status had to be enforceable in order for additional insured coverage to apply.

 

Among the arguments raised by the subcontractor and its insurer was that the general contractor was not entitled to additional insured coverage because the underlying contract was not enforceable based on the failure of the contract to meet the fair notice requirement, which at the time of this case was the law of Texas. (There are a number of states having no anti-indemnity statutes where the courts enforce indemnification when the intent of the contract to transfer the financial consequences of indemnitees is “clear and unequivocal.” An exception was the fair notice doctrine which applied in Texas.)

 

The fallacy of the arguments raised by the subcontractor and its insurer was that it was not a necessary prerequisite for additional insured status that the underlying contract be enforceable in order to meet the definition of “insured contract.” The court countered stating that the additional insured question turned not on the enforceability of an “insured contract,” but on whether the subcontractor had agreed “to assume the tort liability of another party.” The general contractor, in fact, maintained that it still was an additional insured whether the underlying contract was enforceable or not. The court, on the other hand, noted that the position taken by the subcontractor and its insurer was in essence reading into the policy definition of “insured contract,” the requirement that the underlying contract or agreement be enforceable, which the court found to be at odds with established precedent.

 

In so holding, the court referred to Mid-Continent Cas. Co. v. Swift Energy Co., 206 F.3d 487 (5th Cir. 2000), which rejected a similar argument. In reaching its conclusions, the Mid-Continent court had looked to the diametrically opposed presumptions involved in construing an indemnity agreement (construed in favor of the party providing indemnity) and an insurance contract (construed in favor of coverage). Mid-Continent held that based on these principles, the definition of insured contract was to be construed broadly and, thus, the additional insured provision was enforceable, even though the indemnity clause in the underlying contract was invalid.

 

The Gilbane court next turned to the arguments by the subcontractor and its insurer that there was no duty to defend the general contractor because the additional insured provision had not been triggered by language in the underlying complaint filed by the injured employee of the subcontractor. The court focused on the policy language requiring that injury be “caused in whole or in part by” the subcontractor, or those acting on its behalf. Note that the words “caused in whole or in part by” do not clarify what percentage of injury or damage must be caused by the indemnitor.

 

The Gilbane court pointed out that the injured employee of the subcontractor was statutorily barred from naming its employer in the underlying complaint, because the employer had a workers compensation policy in place. Further, the court noted that the employee's own negligence will always be at issue, even in the absence of an allegation to that effect in its pleading. In other words, the court was saying that the injured employee himself, while acting in the course and scope of his employment could have been the cause of his own injuries. Thus, someone acting on behalf of the subcontract potentially caused, in whole or in part, the injury involved in triggering the duty to defend.

 

Basis of Court's Opinion in Gilbane Building Co. v. Empire Steel Erectors, L.P.

 

The Gilbane court went on to discuss the basis of its opinion by drawing an analogy between the language of earlier editions of standard ISO endorsements, which premised additional insured status on the existence of injury or damage “arising out of” the named insured's work with the “caused in whole or in part by” language at issue in this case. In the context of construction, the mere fact an employee is working on the jobsite at the time of injury would likely be enough to trigger additional insured coverage under the “arising out of” language, even if the additional insured were solely at fault in some cases. The 2004 ISO revisions, the court noted, were an attempt at narrowing the coverage of the earlier “arising out of” language by injecting fault into the analysis.

 

The new language requires that the injury be “caused in whole or in part by” the named insured in order for additional insured coverage to be triggered. Additionally, the court noted that the new language required that the liability arise out of the acts or omissions of the named insured or someone acting on its behalf—not simply the named insured's operations. Thus, the position taken by insurers was that in the absence of fault on the part of the named insured, there should be no coverage for the additional insured.

 

The fault requirement, the court noted, led to concern, particularly in third party over actions like the one in the Gilbane case. In such cases, a general contractor enjoying additional insured status under the policy of a subcontractor whose injured employee sues the general contractor had historically been covered. Since employees are barred by workers compensation statutes from suing their own employers, such suits generally do not mention the employers and typically allege only negligence against the general contractor (additional insured).

 

The concern then, according to the court, was that the employee suit did not allege any degree of fault against the employer (named insured). This then leaves CGL insurers free to take the position that the employee's injury was not caused in whole or in part by the subcontractor/employer/named insured, despite the fact that the subcontractor (employer) usually will have been partially at fault.

 

Giving effect to this rationale, the Gilbane court held that it could not say that the subcontractor's injured employee himself, acting on behalf of his employer, during the course of his job, was not possibly a contributing proximate cause of his injuries. The complaint filed by the employee stated that he was injured while walking down a ladder with muddy boots. These facts, the court held, raised at least an inference that the injured employee was at least partially at fault. The court went on to note that it may draw inferences from a complaint that may lead to a finding of coverage. In addition, under the comparative responsibility statute of Texas, the injured employee's negligence would have been at issue had the general contractor been found liable.

 

The end result here was that the court found these facts sufficient to trigger a duty to defend. The Gilbane court, however, went one step further in clarifying that, at least for purposes of triggering additional insured coverage, the underlying contracts imposing that obligation need not be enforceable.

 

Basis of Court's Opinion in Gilbane Building Co. v. Admiral Ins. Co.

 

In the earlier case, the district court determined that the insurer owed a duty to defend and indemnify. In this case, the U.S. Court of Appeals reversed the summary judgment on the duty to defend but affirmed the judgment on the duty to indemnify. The duty to indemnify was based on the fact that, according to the court, a jury would have found the injured employee or its employer to be a least 1% responsible for the injuries.

 

At issue was whether Gilbane qualified as an additional insured. According to the CGL policy of Empire Steel Erectors, a party was to be an additional insured if coverage was required by written contract or written agreement that is an insured contract. Here, the policy defined an insured contract as one where the named insured “assumes the tort liability” of the additional insured. The district court found that the contract that required Empire to secure insurance coverage for Gilbane qualified as an insured contract. Admiral Insurance Company argued, however, that the contract was not an insured contract, because its indemnity provision was unenforceable under Texas law and, therefore, Empire never actually assumed any tort liability.

 

Even though the court assumed, without deciding, that the indemnity provision was unenforceable under Texas law, it still had to decide whether that contract could still be an insured contract under the policy. The court stated that although the Texas Supreme Court had never addressed this precise issue, it was largely resolved by its opinion in Mid-Continent Cas. Co. v. Swift Energy Co., 206 F.3d 487 (5th Cir. 2000). There, Swift sought coverage in an underlying negligence case as an additional insured. The policy defined “insured contract” to include a contract under which the insured “assume[s] the tort liability of another party.” The insurer argued it had no duty to defend because the master service agreement between the contractor and Swift violated the Texas Oilfield Anti-Indemnity Act. As such, the insurer contended that the agreement was unenforceable and not an insured contract, because it did not assume any liability. The court disagreed and held that the agreement was an insured contract because Mid-Continent had intended to assume Swift's liability. The indemnity provision therefore was said to qualify as an insured contract, and Swift therefore qualified as an additional insured. Also cited for this holding was LeBlanc v. Global Marine Drilling Co., 193 F.3d 873 (5th Cir. 1999), which held that an indemnity provision did not have to be valid and enforceable to trigger obligations under the contract, so long as the parties agreed to indemnity.

 

Here, as in Swift, the court added, the insurer's argument relied on the policy language defining an insured contract as one that “assume[s] the tort liability of another party” and concludes that an unenforceable provision does not actually assume liability. However, as explained in Swift, the additional insured question turned not on enforceability, but on whether Empire Steel agreed to “assume the tort liability of another party.” Referring to the contract, the court explained that Empire Steel contracted not only to indemnify Gilbane, but also to secure insurance on its behalf; by doing so, Empire Steel agreed to assume Gilbane's tort liability. That provision, said the court, was not rendered void by the indemnity provision, even if it were unenforceable. As such, Empire Steel agreed to assume Gilbane's tort liability, and Gilbane qualified as an additional insured.

 

As far as the duty to defend was concerned, the court found that the pleadings in the underlying case were not sufficient to trigger the duty to defend. However, the court did find that Admiral Insurance Company had a duty to indemnify Gilbane. Although this seems like an unusual result, the court explained that the Texas Supreme Court had previously considered this kind of situation in D.R. Horton—Tex. v. Markel International Ins.Co., 300 S.W. 3d 740 (2009). In that case, the insurer argued that it did not have a duty to indemnify if the facts alleged in the underlying pleadings did not trigger the duty to defend. The court rejected this argument, holding that it is possible to prove facts at trial that give rise to a duty to indemnify even though those same facts were not sufficiently pleaded to trigger a duty to defend.

 

Tinkering with the Wording of Exclusions

 

Some insurers, particularly those within the excess and surplus market where coverage for contractors is often bare bone, sometimes still find ways to preclude coverage. This is when the CGL policy's employer's liability exclusion (e) is amended. This exclusion, in the standard ISO CGL coverage form, appears to exclude:

 

 

When an additional insured, such as a project owner or a general contractor is sued by an injured employee of a subcontractor, this exclusion should not apply because the injured person is NOT an employee of the insured (additional insured) against whom a claim is made or suit is brought. In other words, coverage does not apply to the named insured (who also is an insured), because it is the employer of the injured employee. All others who are not employers of that injured employee should have coverage.

 

As mentioned, however, some insurers change the employers liability exclusion to preclude coverage to all insureds, including additional insureds. This is done by substituting the article “the” with the article “an” or “any.” Thus, the exclusion reads this way: