Parties who require additional insured coverage from their contractors usually expect the coverage to extend to third-party over claims, particularly with respect to bodily injury claims by employees of contractors. Those with such contracts covered by New Jersey law, however, may want to take special notice of a recent ruling of the New Jersey Appellate Division, which suggests that their expectations may be frustrated unless they take particular care in reviewing the policies at issue.

Specifically, on May 18, 2012, the New Jersey Appellate Division held in Gabriele v. Lyndhurst Residential Community, L.L.C., No. 5257-10T3, 2012 WL 1758138 (N.J. Super. Ct. App. Div. May 18, 2012) (“Gabriele”), that an endorsement in a general liability policy purporting to exclude coverage for bodily injury claims by an employee of any insured barred coverage for an additional insured seeking coverage for a wrongful death suit brought by the estate of a deceased employee of the named insured.

In Gabriele, a subcontractor named Bravante Automatic Sprinkler (“Bravante”) contracted to perform sprinkler work on a construction project. Bravante obtained a general liability insurance policy from International Insurance of Hanover (“Hanover”) that named the project owner and construction manager as additional insureds. During construction, a Bravante employee was killed. His administratrix sued the construction manager, owner and others for wrongful death. The construction manager and owner sought coverage as additional insureds on Bravante’s Hanover policy. Hanover denied coverage based on two exclusions, only one of which was relevant on appeal. This exclusion was contained in an endorsement titled, “Exclusion – Employees, Persons & Organization” (“Employee Exclusion”) and provided that the insurance did not apply to, among other things, bodily injury to an employee of any insured arising out of, in the course of or as a consequence of employment by any insured.