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    « Slideshow - The New ISO Homeowners Insurance Change: Preventing Financial Disaster | Main | Called On The Carpet: Recent Disciplinary Actions Against NY Producers »

    June 22, 2015

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    Chaim Goldberger

    Not so simple

    ISO CG 00 01 10/01 and other similar forms have the following wording added to the "employer's exclusion"

    This exclusion applies:
    (1) Whether the insured may be liable as an
    employer or in any other capacity

    "any other capacity" easily includes employees of subs, etc. how else can an insured be "any other capacity" to "his employee" ? is it if they got injured in the weekend (at the job-site) while not at work?


    Tim Dodge

    Chaim,

    I see what you're saying. However, I found this excerpt in the International Risk Management Institute's *Commercial Liability Insurance* manual:

    "The wording of the exclusion is expanded from the text contained in earlier CGL policies—that is, those used before the 1986 CGL program, to clarify that the exclusion applies whether the insured is liable as an employer or in any other capacity. As a result of this expansion, the exclusion eliminates coverage for claims made by the insured's employees under the "dual capacity doctrine" or so-called consequential bodily injury claims made by a member of an injured employee's family. The employers liability coverage of the National Council on Compensation Insurance (NCCI) workers compensation policy specifically covers dual capacity and consequential bodily injury, and the additional exclusionary wording first incorporated into the 1986 CGL coverage form is intended to eliminate overlaps between the two policies.

    Dual capacity suits attempt to circumvent the exclusive remedy doctrine in most state workers compensation laws by alleging that the employee's injuries resulted not from the employer-employee relationship, but from some other relationship with the employer. For example, an employer may be held liable as the manufacturer of a product (a truck driver for a tire manufacturer is injured when one of the truck tires—manufactured by the employer—blows out) or merely as the owner of premises (a worker is injured because the employer's building is negligently maintained). In a consequential bodily injury suit, a member of an injured employee's family allegedly suffers bodily injury as a result of the employee's injury (e.g., a spouse suffers a heart attack upon learning of the employee's fatal injury).

    The dual capacity language of the exclusion is occasionally misunderstood as extending the exclusion's scope to insureds other than a named insured employer when that other insured causes bodily injury to one of the named insured's employees. For example, the exclusion is sometimes invoked when an additional insured vendor under a manufacturer's CGL policy, or an additional insured contractor under a subcontractor's policy, becomes responsible for injury to the manufacturer's or subcontractor's employee. By itself, the dual language clause—"whether the insured may be liable as an employer or in any other capacity"—can be interpreted to mean "whether the insured is the injured person's employer or not." Under such a reading, the additional insured has no coverage for injury to the named insured's employee injured in the course of employment.

    But such an interpretation fails to take into account the opening language of the exclusion, which limits its applicability to injury to an employee of "the insured." The term "the insured" has been widely held by the courts—and is generally understood by the insurance industry itself—to be a reference to the insured against whom a claim has been made and who is seeking coverage under the policy. (See the discussion later in this annotation of the importance of the separation of insureds principle to the applicability of the employers liability exclusion.) This point is seldom misunderstood in and of itself, but sometimes becomes confused when the dual capacity language is taken out of the context of the rest of the exclusion. "Liable as an employer or in any other capacity" still refers only to the insured who is the employer of the injured employee, but who may also have a liability exposure connected to some additional relationship with the employee."

    This discussion clearly indicates that the exclusion is not intended to apply to subcontracting situations.

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