Independent Contractor Exclusion Is Not Ambiguous, Delaware Supreme Court Rules

The Delaware Supreme Court has ruled that an independent contractor exclusion in an insurance policy was not ambiguous and that it applied to employees of an independent contractor.

The Case

A company contracted to handle the dining services for a nursing home in Wilmington, Delaware. An employee of the company alleged that he was injured while working and he sued the operator of the nursing home. The operator submitted a claim to its insurance carrier, which denied the claim on the ground that the employee was employed by an independent contractor and thus not covered under the operator’s insurance policy. The operator sued its insurer.

The trial court granted the insurer’s motion to dismiss, and the dispute reached the Delaware Supreme Court.

The Delaware Supreme Court’s Decision

The Delaware Supreme Court affirmed.

The court observed that the parties agreed that the policy excluded claims by independent contractors. It then found that the policy was not ambiguous. By its “plain language,” it barred claims brought against the operator by independent contractors and their employees for injuries sustained during the normal course of business – and did not just bar claims brought by “actual people” who were independent contractors.

The court concluded that the “reasonable interpretation” of the exclusion extended to “any damage or injury sustained by the employees or agents of any independent contractor hired by the operator to perform work related to its business.”

The case is Masonic Home of Delaware, Inc. v. Certain Underwriters at Lloyd’s London, No. 361, 2013 (Del. Oct. 30, 2013).