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Argonaut unit prevails in coverage dispute over contractor's injured workers

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An Argonaut Group Inc. unit has prevailed in a coverage dispute with a Great American Insurance Co. unit, with a federal appeals court affirming Argonaut is not obligated to provide coverage for litigation filed by employees of its policyholder’s contractor under a policy exclusion.

Argonaut unit Colony Insurance Co., based in Richmond, Virginia, insured the New York City Housing Authority, while Great American Insurance Co. unit American Empire Surplus Lines Insurance Co., based in Cincinnati, insured the NYCHA’s contractor, Long Island City, New York-based Technico Construction Services Inc., according to Tuesday’s ruling by the 2nd U.S. Circuit Court of Appeals in New York in American Empire Surplus Lines Insurance Co. v. Colony Insurance Co.

NYCHA had hired Technico in 2014 to remodel several of its Manhattan buildings, according to the ruling. Three Technico employees on the project were injured and sued the housing authority. 

American Empire assumed the legal costs under its Technico policy, but filed suit to obtain a contribution from Colony, on the theory that Colony is the primary insurer for the litigation, according to the ruling.

The U.S. District Court in New York ruled Colony’s policy excluded coverage for these types of personal injury suits, which was unanimously affirmed by a three-judge appeals court panel.

A policy exclusion provides there is not coverage for bodily injury “sustained by any contractor, subcontractor or independent contractor or any of their ‘employees,’ ‘temporary workers,’ or ‘volunteer workers,’” said the ruling.

Colony argued the tort lawsuits at issue fell under this exclusion, while American Empire argued the term “any contractor” does not include the term “contractor,” which is defined as Technico.

“‘Any contractor’ must be read to have its plain meaning,” said the ruling. The plain meaning of ‘any contractor’ includes Technico because Technico is defined in the policy as a ‘contractor,’” the ruling said. 

“The presence of the word ‘any’ before contractor supports the breadth of the exclusion. Because these lawsuits were filed by employees of a contractor, Technico, they are excluded under the plain terms of the policy,” said the ruling, in affirming the lower court’s decision.