Pennsylvania High Court Considers Scope Of Employer’s Liability Exclusion In Umbrella Commercial Liability Policy

Following a workplace injury, a worker brought suit against the owner of the premises who leased the property to the worker’s employer.  The employer maintained an umbrella commercial liability insurance policy containing an employer’s liability exclusion.  The policy did not cover liabilities for injury to “An ’employee’ of the insured arising out of and in the course of … Employment by the insured.”  The policy also contained a Separation of Insureds provision stating that “this insurance applies … Separately to each insured against whom claim is made or suit is brought” (emphasis in original).  After being sued, the property owners sought protection from the employer’s liability exclusion.

Yesterday, the Supreme Court of Pennsylvania concluded that the policy’s various use of the terms “the insured” and “any insured” created an ambiguity of the term “the insured” such that it “may be reasonably taken as signifying the particular insured against whom a claim is asserted.”  Applying that analysis to this case, the court reasoned that the employer’s liability exclusion applied only to the employee’s employer and not to the property owners, even though the employer had acknowledged in the lease with the property owners that the property owners were insured under the umbrella policy.