Term “the Insured” in an Insurance Policy may Refer to a Named Insured or an Additional Insured

In McHugh Construction v. Zurich American Ins., the general contractor, McHugh Construction (“McHugh”), was an additional insured under two insurance policies issued by Zurich American Ins. (“Zurich”) to two of McHugh’s subcontractors.  In separate suits, the subcontractors filed third-party contribution actions against McHugh after two McHugh employees filed personal injury lawsuits against the subcontractors.  Zurich refused to defend McHugh and asserted that the employee exclusion in the policies relieved Zurich of any duty to defend McHugh.

The exclusions provided that the insurance did not apply to bodily injury to an employee of the insured arising out of, and in the course of, employment by the insured or performing duties related to the conduct of the insured’s business.

The issue was whether the term “the insured” in the employee exclusion unambiguously excluded coverage for the contribution claims where the underlying injuries were to McHugh’s employees. McHugh argued that “the insured” was ambiguous because it was not defined in the policy and could be construed to apply either to any insured seeking coverage or only the named insured.   Zurich responded that “the insured” was clear and referred to the insured party seeking coverage for a particular claim, no matter whether that insured is a named insured or any additional insured.

The court in McHugh Construction v. Zurich American Ins. held that the term “the insured” was not ambiguous and that the obvious reading of “the insured” is “the insured seeking coverage,” which could be a named insured or an additional insured. McHugh was seeking coverage for contribution claims that fell under the policy exclusions because they were for bodily injuries to McHugh’s employees who allegedly suffered in furtherance of McHugh’s projects. Thus, the court held that Zurich did not need to provide coverage for the claims.

McHugh Construction Co. v. Zurich American Ins. Co., 401 Ill.App.3d 127, 927 N.E.2d 247 (Ill.App. 1 Dist., 2010).