Academic journal article Journal of Risk and Insurance

New Jersey Joins Jurisdictions Applying Employment Exclusion in CGL Policy to Bar CGL Coverage for Discrimination and Harassment Claims

Academic journal article Journal of Risk and Insurance

New Jersey Joins Jurisdictions Applying Employment Exclusion in CGL Policy to Bar CGL Coverage for Discrimination and Harassment Claims

Article excerpt

American Motorists Insurance Co. v. L-C-A Sales Co., 155 NJ 29, 713 A.2d 1007, 1998 NJ LEXIS 600 (New Jersey Supreme Court, June 15, 1998).

The American Motorists decision makes clear that the Schmidt decision discussed above was based not on the language of the Employers Liability policy at issue in Schmidt but on state law and public policy mandating minimum insurance coverage for bodily injury to workers. In a case not presenting these statutory and public policy considerations, the New Jersey Supreme Court read the language of the employment exclusion contained in the standard commercial general liability policy (CGL) to bar coverage for age discrimination and harassment claim made by a former employee of the policyholder.

John Piccialo worked as a salesman for L-C-A Sales (LCA) for more than thirty years until his termination in 1991 at age sixty-seven. He sued, charging that he had been harassed, because of his age, into involuntary retirement. LCA sought coverage for the Piccialo suit under its CGL. The CGL contained the typical insuring agreement covering bodily injury claims against the policyholder and also contained the typical exclusionary language of the time that there would be no coverage for bodily injury to "[an employee] of the insured arising out of and in the course of employment by the insured."

The court found this exclusion broad, clear, and enforceable despite the general rule that it is the insurer's burden to demonstrate the applicability of the exclusion. …

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