Interpretation of policy - Exclusions - Employees - Bodily injury

Sam's Auto Wrecking Co. (c.o.b. Wentworth Metal) v. Lombard General Insurance Co. of Canada

An executive officer of a company was considered an employee for the purposes of an "employee injury exclusion clause". The court held the wording was not ambiguous, despite its interpretation of the exception leading to the odd result that there could be coverage for employees also covered by workers' compensation legislation, but not for employees falling outside the scope of the legislation.

[2013] O.J. No. 1413

2013 ONCA 186

Ontario Court of Appeal

J.I. Laskin, M. Rosenberg and M.H. Tulloch JJ.A.

March 28, 2013

The operations manager of the insured was injured in a workplace accident caused by another employee of the insured. The operations manager was also an executive officer of the insured and so was not covered by Worker's Compensation as coverage was optional for executive officers. The insured settled the claim with the injured operations manager and proceeded against the insurer for indemnification.

The insurance policy in place had a broad coverage grant but excluded coverage for " 'bodily injury' to an employee of the Insured arising out of and in the course of employment by the Insured". However, the exclusion did not apply to "employees on whose behalf contributions are made by or required to be made by the Insured under the provisions of any workers compensation law”. The language of the exclusion and the exception did not refer to executive officers. However, the definition of an insured included "employees, other than your executive officers" and went on to state that none of these employees was an insured for bodily injury.

At trial, the judge dismissed the action against the insurer. The trial judge found insurance coverage was unavailable because the operations manager was an employee of the insured and was working in the course of his employment and, therefore, the "employee injury exclusion" in the CGL applied. The insured appealed the decision of the trial judge.

The court of appeal upheld the trial judge's decision.

The court found there is no inconsistency in being both an executive officer and an employee, which the injured party was. The court was aware that its reading of the exclusion and the exception to the exclusion produced an odd result: the exclusion takes away coverage for a workplace injury not covered by workers compensation legislation; the exception to the exclusion reestablishes coverage for a workplace injury where insurance coverage is not needed. In this case, the exception to the exclusion did not apply because the insured was not, and was not required to, pay Workers' Compensation premiums for the injured party.