CGL policies contain a “Separation of Insureds” provision. This provision oftentimes states:
Except with respect to the Limits of Insurance, and any rights or duties specifically assigned this Coverage Part to the first Named Insured, this insurance applies:
1. As if each named insured were the only Named Insured; and
2. Separately to each insured against whom claim is made or “suit” is brought.
This provision is designed to “create separate insurable interests in each individual insured under a policy, such that the conduct of one insured will not necessarily exclude coverage for all other insured.” Evanson Ins. Co. v. Design Build Interamerican, Inc., 569 Fed.Appx. 739 (11th Cir. 2014). This provision also allows one insured under the policy (e.g., additional insured) to sue another (e.g., named insured) without violating potential coverage because there are separate insurable interests. This is a valuable provision in CGL policies.
The case of Taylor v. Admiral Ins. Co., 187 So.3d 258 (Fla. 3d DCA 2016) exemplifies the application of the Separation of Insureds provision, particularly when there is an additional insured. In this case, a person attended an event at a location owned by Miami-Dade County that was hosted by her employer. As she was leaving the event, she slipped and injured herself. Her employer had a CGL policy that had a blanket additional insured endorsement that made the County an additional insured. The employee, through a Coblentz agreement entered into with the County (since the CGL carrier refused to tender a defense to the County) sued her employer’s CGL policy for coverage as an assignee of the County. The CGL carrier argued that the employer’s liability exclusion precluded CGL coverage. The employer’s liability exclusion, in a nutshell, precludes coverage for bodily injury claims from the insured’s employees, subcontractors, etc. This exclusion can be modified by endorsement that expands the scope so keep an eye out on this endorsement.
The Third District Court of Appeal held that the Separation of Insureds provision precluded the application of the employer’s liability exclusion as to the additional insured. The Separation of Insureds provision allowed coverage for the employee’s claim against the County (an additional insured) since the County had a separate insurable interest under the policy. Since the County was not the employee’s employer, and under the Separation of Insureds provision the County was separately insured under the policy, the employer’s liability exclusion did not apply to the County as an additional insured.
Notably, other cases around the country, that have modified the employer’s liability exclusion through endorsement, have come up with a different conclusion.
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