Court Uses Endorsement¹s Exclusion to Interpret Policy Exclusion, Finding Coverage
 

Court Uses Endorsement¹s Exclusion to Interpret Policy Exclusion, Finding Coverage

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From FC&S Legal: The Insurance Coverage Law Information Center: Court Uses Endorsement¹s Exclusion to Interpret Policy Exclusion, Finding Coverage. ...

From FC&S Legal: The Insurance Coverage Law Information Center: Court Uses Endorsement¹s Exclusion to Interpret Policy Exclusion, Finding Coverage.

A federal district court in Illinois, relying on the text of an exclusion in an endorsement to interpret an exclusion in a
homeowner’s policy, has found coverage for an underlying plaintiff’s lawsuit against the insureds.

The Case: Joseph Panfil and Renee Michelon sued Nautilus Insurance Company, seeking an order that it was obligated to defend them in an underlying lawsuit brought by a person who worked for a subcontractor they had hired. Nautilus contended that an “employee exclusion” in the policy precluded its duty to defend.

The Policy: An endorsement in the policy excluded coverage for: bodily injury to employees arising out of the course of their employment.

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Court Uses Endorsement¹s Exclusion to Interpret Policy Exclusion, Finding Coverage Court Uses Endorsement¹s Exclusion to Interpret Policy Exclusion, Finding Coverage Document Transcript

  • The Insurance Coverage Law Information Center The following article is from National Underwriter’s latest online resource, FC&S Legal: The Insurance Coverage Law Information Center. COURT USES ENDORSEMENT’S EXCLUSION TO INTERPRET POLICY EXCLUSION, FINDING COVERAGE January 9, 2014 Steven A. Meyerowitz, Esq., Director, FC&S Legal A federal district court in Illinois, relying on the text of an exclusion in an endorsement to interpret an exclusion in a homeowner’s policy, has found coverage for an underlying plaintiff’s lawsuit against the insureds. The Case Joseph Panfil and Renee Michelon sued Nautilus Insurance Company, seeking an order that it was obligated to defend them in an underlying lawsuit brought by a person who worked for a subcontractor they had hired. Nautilus contended that an “employee exclusion” in the policy precluded its duty to defend. The Policy An endorsement in the policy excluded coverage for: bodily injury to: employees arising out of the course of their employment. Section D of the Contractors Subcontracted Work Endorsement added an exclusion to the policy that stated: This insurance does not apply to “bodily injury,” “property damage” or “personal and advertising injury” arising out of work performed by any contractors or subcontractors unless such work is being performed specifically and solely for you. The Court’s Decision The court found coverage. In its decision, it acknowledged that the plaintiff in the underlying complaint appeared to fall within the policy’s definition of “employee.” The court then pointed out that Section D of the Contractors Subcontracted Work Endorsement excluded a class of persons from coverage for “bodily injury” who already were excluded from coverage by the employee exclusion (contractors and subcontractors), but then recognized an exception to the exclusion (contractors and subcontractors working specifically for the insured were not excluded). It said that the persons who would have been saved by the exception apparently were in any event also excluded from coverage under the policy’s employee exclusion. The court refused to find the endorsement’s exclusion to be “meaningless or superfluous.” According to the court, if the exception for injured persons who were not excluded from coverage that was provided for in Section D was to mean anything, the employee exclusion had to be interpreted “so as to make room for it.” The court agreed with Nautilus that, under Illinois law, an exception to an exclusion did not create coverage or provide an additional basis for coverage, but said that by “preserving coverage already granted in the insuring provision,” the exception to the exclusion offered some indication as to what the policy itself was meant to cover. Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com
  • Therefore, the court found that the coverage already granted that was being “preserved” by the exception was “bodily injury arising out of work performed by contractors or subcontractors” who were working “specifically and solely for the insured.” Having preserved this coverage, and given that the underlying plaintiff potentially fell within it, the court held that the Contractors Subcontracted Work Endorsement suggested that the policy (at least potentially) intended to cover the underlying complaint. Although the employee exclusion appeared to suggest otherwise, it was only by rendering the “bodily injury” exclusion and exception in Section D of the Contractors Subcontracted Work Endorsement meaningless, the court said. Construing these terms in favor of the insured, the court concluded, the underlying complaint presented a claim that was potentially covered by the policy, and Nautilus thus had a duty to defend the underlying suit. The case is Panfil v. Nautilus Ins. Co., No. 12 C 6481 (N.D. Ill. Jan. 7, 2014). Call 1-800-543-0874 | Email customerservice@SummitProNets.com | www.fcandslegal.com Copyright © 2014 The National Underwriter Company. All Rights Reserved. NOTE: The content posted to this account from FC&S Legal: The Insurance Coverage Law Information Center is current to the date of its initial publication. There may have been further developments of the issues discussed since the original publication. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice is required, the services of a competent professional person should be sought. For more information, or to begin your free trial: • Call: 1-800-543-0874 • Email: customerservice@SummitProNets.com • Online: www.fcandslegal.com FC&S Legal guarantees you instant access to the most authoritative and comprehensive insurance coverage law information available today. This powerful, up-to-the-minute online resource enables you to stay apprised of the latest developments through your desktop, laptop, tablet, or smart phone —whenever and wherever you need it.