The facts were clear. Travis’ car rear-ended Giuliana’s car and, since he was at fault, she should collect from his auto insurance. But there was a catch. Since Travis was delivering pizzas for Nick’s Brick Oven Pizza, Giuliana sued Nick’s for its vicarious liability in the case.

Nick's commercial general liability carrier declined to cover the loss because of the aircraft, auto or watercraft exclusion. However, there was a twist. Since Travis was a temporary employee, Nick contended that he was not an insured and the exclusion should not apply.

The courts agreed with Nick's.

Click here for more details on this court case.

The definitions section of a coverage form or policy both gives coverage and takes it away. While undefined terms are based on common dictionary definitions and prior legal precedent, defined words and phrases must be clear and unambiguous. In this case, "temporary worker" was defined as a person furnished to (Nick’s) to substitute for a permanent employee on leave or to meet seasonal or short-term workload conditions.

The court then asked an important question – what does it mean to be furnished?

Click here to review the CGL definitions section in PF&M.

This issue goes beyond commercial general liability. The definition of "employee" in commercial crime coverage forms is different but the coverage implications are just as serious.

Click here to read the Rough Notes Magazine article where Don Malecki shares his concerns about this issue with respect to crime coverage.

Since determining the types of employees your clients have is so important, why not also discuss another very important coverage with them at the same time. Employment practices liability insurance (EPLI) is becoming more of a necessity than a coverage that is simply nice to have, and completing an EPLI application could also answer many questions related to employees.

Click here for a sample letter you might consider sending to your customers to encourage them to consider purchasing employment practices liability insurance.

PF&M analyzes many American Association of Insurance Services (AAIS) coverage forms and policies. Some recently reviewed are:

Have you found what you need in the Producer OnLine? Is there a classification
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