LIABILTY INSURANCE EXCLUSION FOR EMPLOYEES: CODISPOTI V. PRESTON HIGHWAY MOTORS, INC. (COA 8/10/2007)

CODISPOTI V. PRESTON HIGHWAY MOTORS, INC.
INSURANCE:  LIABILITY EXCLUSIONS; UNINSURED MOTOR VEHICLE
2006-CA-001552
PUBLISHED: AFFIRMING
PANEL: THOMPSON, PRESIDING; MOORE AND GRAVES CONCUR
COUNTY: JEFFERSON
DATE RENDERED: 8/10/2007

This appeal dealt with an exclusion to coverage for injury to an employee of the "insured." The circuit court entered summary judgment holding that an employee exclusion in the liability policy precluded coverage to Joseph M. Codispoti.

Eric Jameson was driving a vehicle with the permission of the owner Codispot who also was the owner and president of Preston Highway Motors.   Jameson was an independent contractor and, therefore, not an employee of Preston Highway Motors, who was hired to drive a Preston Highway Motors car to Indianopolis for an auction.  Jameson was driving, and Codispoti was a passenger, when  Jameson fell asleep, and wrecked the car injuring himself and his passenger Codispoti.

The vehicle was insured under a policy with First Financial Insurance naming Preston Highway Motors as the named insured who did that pursuant to the terms of the policy, Jameson was a permissive user of the vehicle and, therefore, an insured. However, the policy had an exclusion precluding coverage to indemnify injuries to an employee of the owner.

This insurance does not apply to any of the following:

EMPLOYEE INDEMNIFICATION AND EMPLOYER’S LIABILITY

“Bodily injury” to:
a. An “employee” of the “insured” arising out of and in the course of:
      (1) Employment by the “insured”; or
      (2) Performing the duties related to the conduct of the “insured’s”      business.

Codispoti argued that the exclusion did not apply because he was not an employee of the insured Jamison. The Court of Appeals found that it did not matter, because Condispoti was an employee of Preston Motors, who was also an insured. Therefore, the exclusion applied.

COA also held the exclusion was not void against public policy rejecting Codispoti’s argument that it eliminated insurance coverage for Jameson. The Court of Appeal found this argument lacking as well. It noted that the same exclusion was previously found not to violate public policy in the case of Brown v. Indiana Insurance Co., 184 S.W.3d 528 (Ky. 2005).  Although the COA recognized the factual distinction between Brown and the present case because unlike in Brown where the accident victim and the tort-feasor were both employees of the named insured, Jameson was not an employee of the named insured.  This made no difference to the outcome, as they affirmed the summary judgment.

By Michael Stevens