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Do You Know What Your Commercial General Liability Policy Actually Covers?


In any construction project, a general contractor will take out a commercial general liability (CGL) policy to insure against known risks. But do you actually know what your CGL policy covers? You might assume that certain common risks are covered, but the plain language of the insurance contract may say otherwise.

Michigan Court Upholds CGL Policy That Does Not Cover Injuries to Subcontractor’s Employees

A recent decision from a Michigan appeals court demonstrates how the language of a CGL policy can come back to bite a general contractor. This particular case, Estate of Messenger v. Atain Insurance Company, was the result of a construction accident that killed a worker. The worker was employed by a subcontractor on the project. A fire broke out at the job site, and the worker was killed after inhaling smoke.

The worker’s estate subsequently sued the project owner, the general contractor, and the subcontractor that employed the worker. The general contractor settled the estate’s claims for $1 million. The general contractor assumed its CGL carrier would cover the costs of the settlement. When the insurer balked at paying the claim, the estate and the general contractor jointly filed a breach of contract lawsuit in the Michigan courts.

But both a trial judge and later the Michigan Court of Appeals ruled summarily in favor of the insurance company, holding it had no duty to defend or indemnify the general contractor against the estate’s claims. As the trial court explained, the CGL policy contained an exclusion for “bodily injury” to any “employee” or “employee of any subcontractor” working on the project. The Court of Appeals agreed the exclusion language “unambiguously eliminates coverage” for any negligent acts committed by the general contractor with respect to the job site.

One of the judges who heard the case for the Court of Appeals, Justice Elizabeth L. Gleicher, wrote separately to note the absurdity of the insurance policy itself. Essentially, Gleicher wrote, the policy “as written applies to very few risks.” It makes sense to exclude damages arising from workers’ compensation claims, as that is covered by separate insurance, but Gleicher noted that the language of the CGL policy effectively expanded the workers’ compensation exclusion to eliminate coverage for all injuries arising from the general contractor’s negligence.

Indeed, Gleicher said the GCL policy as written only covered “bodily injuries to passersby, delivery persons, architects or engineers” and other members of the public who might be injured. But given “[m]ost construction sites are closed inaccessible to the public,” this rendered the “risk of covered injuries rather small.” More to the point, the general contractor had no protection against “the most common risk it faces–a lawsuit brought by an employee of a subcontractor arising out of its own negligence.”

Speak with a Florida Construction Attorney Today

Before you take out any insurance related to a job site, it is a good idea to consult with a qualified Florida construction lawyer who can review the policy and help you decide if it actually provides the protection you require. Contact Linkhorst Law Firm, P.A., today to schedule a consultation.


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