Whether an exclusion for coverage of bodily injury to an employee of "the insured" applied to an additional insured was the issue in James McHugh Construction Co. v. Zurich Am Ins. Co., 2010 Ill. App. LEXIS 318 (Ill. Ct. App. April 13, 2010).
McHugh, the general contractor, hired JMS Electric, Inc. to design and build a electrical system on a construction project. Pursuant to the agreement, JMS added McHugh as an additional insured under its general liability policy with Zurich. During the construction, a McHugh employee was injured when he fell into a ditch utilized by JMS to install electrical components. The employee sued JMS. JMS filed a third-party complaint for contribution against McHugh alleging McHugh's negligence contributed to causing the employee's injuries.
McHugh tendered its defense to Zurich. Zurich denied coverage because the policy excluded coverage for bodily injury to an employee of "the insured" arising out of and in the course of employment by "the insured." McHugh argued it was "an insured" under the policy, but was not "the insured" under the exclusion because only JMS was "the insured." Otherwise, McHugh argued, the term "the insured" in the exclusion was ambiguous. The trial court disagreed and found no duty to defend.
The Illinois appellate court affirmed. The parties agreed that "an insured" referred to both the named insured and any additional insureds. It made no sense to interpret "the insured" differently from "an insured." The obvious meaning of "the insured" was "the insured seeking coverage." Interpreting "the insured" to mean "the insured seeking coverage" meant that both the named insured and the additional insured were equally subject to the exclusion.
