Recent Massachusetts Appeals Court unpublished decision adds to confusion over the already complex system for additional insured coverage.

Phoenix Bay State v First Financial Insurance Mass Appeals Court 2020


General                Phoenix

Subcontractor    Lanco

Sub’s Insurer      FFIC

Suit                       Lanco employee v Phoenix

Policy                   Phoenix demands defense as an additional insured on Lanco policy               


First Financial (FFIC) insured Lanco Scaffolding, a subcontractor to Phoenix. 

Phoenix required Lanco to provide primary and non-contributory GL coverage naming Phoenix as an additional insured on Lanco’s General Liability policy. The endorsement granted coverage for bodily injury caused by “[Lanco’s] acts or omissions” or by “[t]he acts or omissions of those acting on [Lanco’s] behalf.

A Lanco employee brought a negligence action for personal injuries against Phoenix. Phoenix sought coverage as an additional insured under the Lanco policy with FFIC. FFIC resisted, relying on the cross-liability exclusion barring coverage for claims by one insured against another insured.

“A cross liability exclusion . . . bars coverage for claims brought by one insured against another insured.” The policy said, the cross-liability exclusion bars coverage for bodily injury to, …. an “employee of any insured” (emphasis added).

The separation of insureds clause requires that each insured be treated as having its own insurance policy.

For exclusions that pertain to “any insured,” severability of interests clauses have no effect, and the plain meaning of “any” applies.

For exclusions that pertain to “the insured,” severability of interests clauses make clear that “the insured” refers only to the insured who is actually seeking coverage.


FFIC had no duty to defend Phoenix under the terms of the policy.

COMMENT         This is the exact situation motivating those on higher tiers to demand additional insured coverage from those below. The lower tier’s employee sues the entity above, that upper entity expects to enjoy coverage as an additional insured on the GL policy of the lower tier entity.   This case defeats that expectation.  If the holding lasts, higher tier entities will demand policy wording allowing coverage that this case denied.

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