While the named insured under a liability policy is obviously entitled to certain coverages under their liability policy, additional entities will often qualify for coverage under the policy depending on how “insured” or “additional insured” are defined.. The presence of additional insureds likely will not expand the liability limits available but having an additional insured under the policy can be significant to the applicability of various exclusions in the policy. This is especially true when a separation of insureds provision is present in the policy which compels the carrier to individually evaluate the scope of coverage to each potential insured as evidenced by a recent Connecticut decision.
Utica First Ins. Co. v. E&J Professional Painting, LLC, 2025 WL 1379147 (Conn. 2025)
Background
Stellar Painting Company solicits and secures painting projects and hires contractors to complete the projects. Stellar secured a project to paint a home owned by the Ganesh Family and hired E&J Professional Painting to complete the project. As part of the agreement between E&J and Stellar, Stellar and E&J entered a contract that required E&J to indemnify and hold Stellar harmless for any injuries to E&J’s employees/agents or claims made by customers. E&J also agreed to name Stellar as an additional insured under E&J’s liability insurance policy with Utica First Insurance Company.
E&J began work on the Ganesh project. During the project, Hiury Bezzerradas, an E&J employee, was injured. After his injury, Bezzarradas filed a lawsuit naming the Ganesh family as Defendants and later added Stellar as a defendant under a negligence theory. The Ganesh family would also file a third-party claim against Stellar for common law indemnification. Additional claims, including third-party claims against E&J would also be added but are not particularly relevant here.
E&J’s Utica Policy
At the time of Bezzeradas’ injury, E&J was the named insured under a “contractors special policy.” E&J’s Utica Policy contained a “blanket additional insured endorsement.” Under this endorsement the definition of insured was expanded to include “any person or organization that [E&J is] required to name as an additional insured on this policy of (Matt: or?) as an additional insured on this policy under a written contract under a written contract or written agreement.”
Like most liability policies, the Utica Policy contained a separation of insureds provision that essentially requires that coverage be evaluated for each insured separately. The Utica Policy also contained an “Employee Liability Exclusion” and a “Workers’ Compensation Exclusion.” Respectively, those provisions excludecoverage for:
- Bodily injury…to an employee of the insured if it occurs in the course of employment by the “insured”… (Employee Liability Exclusion);
- Bodily injury…if benefits are provided or are required to be provided by the insured under a workers’ compensation, disability benefits, occupational disease, unemployment compensation, or like law. (Workers’ Compensation Exclusion).
Utica’s Decision
Utica received notice of the lawsuit and was made aware that Stellar had been sued by Bezzeradas and by the Ganesh family. Utica was also made aware that E&J had a contract requiring it to indemnify and hold Stellar harmless. Utica also learned that Bezzeradas was an employee of E&J and was injured at the Ganesh house while performing work in the course of his employment with E&J.
After receiving this information, Utica declined to provide a defense or indemnity to Stellar. This denial was based in part on the Employee Liability Exclusion and the Workers Compensation Exclusion.
Stellar’s counsel again requested a defense from Utica for the claim made by Bezzeradas and the Ganesh family. Through that request Stellar’s counsel reiterated that Stellar should be considered an additional insured under the Utica Policy. Utica was unmoved and reiterated its denial of coverage based in part on the Employee Liability and Workers’ Compensation Exclusion.
Superior Court Lawsuit
Utica eventually filed an action for declaratory judgment alleging in part that the Employee Liability and Workers’ Compensation Exclusion precluded coverage for the various claims made against Stellar. Utica filed a motion for summary judgment arguing that the two exclusions precluded coverage for Stellar. The Court addressed the applicability of each of these exclusions.
Employee Liability Exclusion
The Court first noted that the separation of insureds provision applied to the Employee Liability exclusion meaning coverage for Stellar and E&J should be evaluated separately. The Court then went on to note that the Employee Liability Exclusion precludes coverage for bodily injury to an employee that occurs when the employee was in the course and scope of employment with the insured. This was vital to the Court’s decision as Bezzaradas was only an employee of E&J and not Stellar’s employee.
While the Employee Liability Exclusion would potentially exclude coverage for E&J for a claim brought for Bezzaradas for hisinjuries, the same was not true for Stellar. Stellar was not Bezzaradas’ employer and the separation of insureds provision required coverage for Stellar be analyzed independently of coverage for E&J.
Workers’ Compensation Exclusion
The Court again noted that while E&J would not have coverage given the Workers’ Compensation Exclusion, the same was not true for Stellar. The presence of the separation of insureds provision again precluded a denial for E&J from being imputed to Stellar.
Instead, when separately evaluating coverage for Stellar, the Workers’ Compensation Exclusion was inapplicable to Stellar. There was no indication that Stellar had been Bezzaradas’ employer or that Stellar had paid workers’ compensation benefits to Bezzaradas. The record lacked any information or facts that would justify a denial of coverage to Stellar under the Workers’ Compensation Exclusion.
Utica illustrates the importance of identifying each potential insured under a liability insurance policy and evaluating coverage separately for each such insured. Coverage for the named insured may be excluded but that does not guarantee that additional coverage is automatically voided for every additional insured.
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