Liability insurance policies generally have an exclusion barring coverage for claims brought by the insured’s own employees. These exclusions usually do not bar coverage, however, when claims are brought by an employee of one insured against another insured. This scenario occurs frequently, especially for companies in the retail industry, who are usually one of multiple insureds under a single policy and are susceptible to being sued by another insured’s employees.
In an important decision, the Second Circuit Court of Appeals ruled that an employer’s liability exclusion does not preclude coverage for claims brought by an employee of one insured against another insured. The decision reinforces that a plain reading of the policy’s language controls and any ambiguity in the policy’s terms must be construed in favor of the insured. In a recent article in Lodging Magazine, Hunton & Williams LLP’s insurance coverage lawyers Syed S. Ahmad, Sergio F. Oehninger and Brittany M. Davidson discuss the significance of the Second Circuit’s ruling.