The Seventh Circuit found that an "Injury to Employees, Contractors, and Employees of Contractors" exclusion was not applicable to bar coverage for injuries to a construction worker. Atlantic Casualty Ins. Co. v. Paszko Masonry, Inc., 2013 U.S. App. LEXIS 11561 (7th Cir. June 7, 2013).

   The underlying plaintiff was an employee of a waterproofing company, Raincoat Solutions, which submitted a bid to the general contractor to perform caulking on the building being constructed. Before the bid was accepted, the general contractor asked for a demonstration. Raincoat brought the plaintiff to the job site to demonstrate caulking. When the plaintiff was finished, a beam supporting masonry equipment fell on him, causing injury. A half hour after the accident, Raincoat signed a subcontract for the caulking job. 

   The plaintiff sued the general contractor. The developer had secured a policy from Atlantic. The general contractor argued it was an additional insured under the policy. The district court found the "Injury to Employees, Contractors and Employees of Contractors" exclusion barred coverage, so no determination was made on the additional insured status of the general contractor. 

  The exclusion barred coverage for "bodily injury" to any contractor arising out of performing services by the contractor for which any insured may become liable. An expansive definition of contractor included any general contractor, developer, subcontractor and any persons "working for and/or providing services or materials of any kind for these persons." 

   The Seventh Circuit noted that when the underlying plaintiff was injured, his employer, Raincoat, either was a subcontractor or was providing services of any kind to a contractor, the plaintiff was a also  "contractor" under the exclusion because he was working for Raincoat. In such case, the accident would not be covered. 

   But the exclusion was ambiguous. The demonstration caulking could have been a "provision of services" either because the caulking remained on the windows or because the demonstration led to the signing of the contract. It was also possible, however, that "services" were not provided until the contractor began to do compensated work on the project. 

   Given the ambiguity, the court found that the underlying plaintiff was not a contractor when he was injured. Therefore, Atlantic had a duty to defend the general contractor if it was determined to be an additional insured.

   Thanks to Damon Key blogging colleague Robert Thomas (www.inversecondemnation.com) for sending this case my way.