Asbestos Lawsuit and the CGL Form

Q

I insure an installation contractor who has been pulled into an asbestos-related lawsuit. The widow of a man who worked for the contractor for only a few months filed the suit against every contractor for whom her husband ever worked. She alleges that her husband brought asbestos particles home in his work clothes, which caused her to develop asbestosis.

While working for my insured, the man did new construction. He was not exposed to any asbestos. Despite this, the contractor needs to be defended. Unfortunately, his general liability insurer is denying defense because asbestos-related claims are excluded on the policy that applies.

One of the charges in the suit is for negligence in using asbestos. I think that the carrier should provide a defense based on the charge of negligence, but I can't convince the adjuster. Should the GL carrier provide a defense?

Tennessee Subscriber

A

The commercial general liability carrier probably does not owe a defense. Usually, any claims arising from asbestos would be excluded. We also believe there is another exclusion that is even more important to the denial.

You said this man was an employee of your insured. Based on that, we are surprised that the CGL carrier didn't include exclusion 2.e., employers liability, in its reason for denial. This exclusion voids coverage for “bodily injury” to an employee arising from employment by the insured. It further states that there is no coverage for “bodily injury” to the spouse, child, parent, brother, or sister of that “employee” as a consequence of employment by the insured.

It is our opinion that this claim should be filed with the workers compensation and employers liability carrier of record when the man worked there. There should not be any asbestos exclusion on that policy. The carrier should respond through the employers liability section.

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