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Appellate Division Holds That Employee Injury Exclusion Applies to Additional Insureds as well as Insureds

The Appellate Division, Second Department recently issued a decision which has once again reaffirmed that exclusions added to insurance policies by way of an amendment apply to both insureds and additional insureds alike in Soho Plaza Corp. v. Birnbaum, 2013 NY Slip Op 05058.

Soho Plaza Corp. and Dermer Management Inc. sought additional insured coverage from Utica First Insurance Company under a policy it issued to Diamond ERA Construction, Inc. for an accident that occurred on March 15, 2012 when Jason Birnbaum fell from a ladder during the course of his employment for Diamond.   Upon receipt of a request for coverage from Soho and Dermer, Utica First denied coverage based upon an amendatory endorsement which excluded coverage for injuries arising out of bodily injury sustained by “any employee of any insured”. 

Soho and Dermer challenged Utica First’s denial of coverage, asserting that they were additional insureds by way of a separate additional insured endorsement and that the Employee Exclusion, which was not specifically mentioned or identified in the Blanket Additional Insured Endorsement, was therefore not applicable as to them.

Both the trial court and, most recently, the Appellate Division, upheld Utica First’s reliance upon the Employee Exclusion.  In so holding, the Appellate Division explained:

Here, the plain meaning of the exclusion invoked by Utica was that the Utica policy did not provide coverage for damages arising out of bodily injury sustained by an employee of any insured in the course of his or her employment. . . Contrary to the plaintiffs' contentions, the fact that the blanket additional insured endorsement contained its own additional exclusions did not eliminate the exclusions contained in the Utica policy. In construing an endorsement to an insurance policy, the endorsement and the policy must be read together, and the words of the policy remain in full force and effect except as altered by the words of the endorsement . . . Accordingly, since the employee exclusion clause in the Utica policy unambiguously recited that coverage was precluded, the Supreme Court properly granted that branch of Utica's motion which was, in effect, for a judgment declaring that Utica is not obligated to defend and indemnify the plaintiffs in the underlying action.

This decision reaffirms the long standing rule that the New York Courts read and apply all of the terms and conditions contained in all of the forms used by an insurer when issuing an insurance policy, whether those terms are contained in the original main policy form, or an endorsement thereto.