Opinion ID: 901545
Heading Depth: 2
Heading Rank: 1

Heading: The Employer's Liability Exclusion.

Text: [¶ 13.] The language in an insurance contract is to be construed liberally in favor of the insured. However, this rule of construction applies only when the language of the insurance contract is ambiguous. Further, the contract's language must be construed according to its plain meaning. City of Fort Pierre v. United Fire & Cas. Co., 463 N.W.2d 845, 848 (S.D.1990). In determining coverage under the contract, we must look to the contractual intent and objectives of the parties as expressed in the contract. Id.; Black Hills Kennel Club, Inc. v. Fireman's Fund Indem. Co., 77 S.D. 503, 506-07, 94 N.W.2d 90, 92 (1959). [¶ 14.] As support for its decision that the employer's liability exclusion in the Zurich policy excluded coverage for Loebs, the circuit court relied on this Court's analysis in St. Paul Fire & Marine Ins. Co. v. Schilling, 520 N.W.2d 884 (S.D. 1994). Northland argues that the Schilling decision is not applicable and attempts to distinguish the policy language in the Schilling case from the policy language in the Zurich policy. We find this argument unpersuasive. [¶ 15.] While interpreting an employer's liability exclusion, this Court in Schilling stated: The on-the-job exclusion states specifically that coverage will be excluded for claims of an employee of  any protected persons. It does not limit the exclusion only to employees of the named insured nor does it limit coverage only to claims of an employee of the protected person. 520 N.W.2d at 887 (emphasis in original). [6] In Schilling, a YMCA employee gave permission to a gymnast-driver to drive a YMCA-owned van home from a gymnastics clinic in North Dakota. Id. at 885. The employee sustained injuries when the driver fell asleep at the wheel and caused an accident. Id. Subsequently, the employee initiated a personal injury action against the driver. Id. at 886. The driver sought coverage for the action as an omnibus insured under YMCA's liability policy. Id. This Court, finding the employer's liability exclusion in the policy unambiguous, upheld the exclusion as applied to the omnibus insured where the injured claimant was an employee of the named insured (YMCA), but not an employee of the omnibus insured (driver). Id. at 888. [7] [¶ 16.] The applicable employer's liability exclusion in the Zurich policy is as follows: B. Exclusions This insurance does not apply to any of the following:    4. 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 . . . Northland asserts that the employer's liability exclusion in the Zurich policy only precludes coverage for an insured that was the employer of the injured claimant-employee at the time of the accident. Northland's reasoning is that because Fetzer was not an employee of Loebs, but rather an employee of UPCI, the exclusion is not applicable and coverage exists. [8] However, an examination of the Zurich policy defining insured defeats that contention. The Zurich policy defines insured as follows: Insured means any person or organization qualifying as an insured in the Who Is An Insured provision of the applicable coverage. Except with respect to the limit of insurance, the coverage afforded applies separately to each insured who is seeking coverage or against whom a claim or suit is brought. (Emphasis added). The language in the Zurich policy defines Who Is An Insured as not only the named insured on the policy, but also any other individual using a covered vehicle with permission from the named insured. [¶ 17.] We find that the Zurich policy language is not ambiguous. As such, upon examining the policy language, it cannot be said that the employer's liability exclusion applies to preclude coverage for the underlying action only for an employer of the employee who is asserting the claim. Rather, the exclusion applies to an insured as defined under the policy; specifically, the named insured (employer) and a permissive additional insured (omnibus insured).