The U.S. District Court for the Southern District of New York addressed the scope of insurance coverage for workplace injuries on a Brooklyn, New York, construction project, holding that the project owner’s insurer had no duty to defend or indemnify the owner in a personal injury lawsuit stemming from a construction accident.
The property owner hired a general contractor for a condominium project. In March 2020, an employee of one of the GC’s subcontractors was injured when a scaffold collapsed. The employee sued both the property owner at the general contractor in state court. The owner sought coverage and a defense from its commercial general liability insurer, but the insurer denied coverage, citing three exclusions: Contracted Persons, Independent Contractors, and Condominium.
In ruling in favor of the insurer, the court’s analysis centered on the Contracted Persons Exclusion, which bars coverage for bodily injury to “any person who is employed by, leased to or contracted with any organization that…contracted with others on any insured’s behalf for services.” The court found the exclusion “clear and unambiguous,” stating:
“This language clearly contemplates someone other than the insured ( i.e ., a contractor) retaining yet another organization ( i.e ., a subcontractor) to perform work for the insured and bars coverage for injuries to the employees of any such organization contracted to work on behalf of the insured.”
The owner argued that the subcontractor which employed the injured plaintiff was not contracted “on behalf of” the property owner, but the court rejected this as a “semantic game,”explaining:
“The Contracted Persons Exclusion plainly is not limited to employees of an agent of the insured. Rather, the language…bars coverage for employees of an organization that is contracted for the benefit, or in the interest, of the insured.”
While the court noted that the Condominium Exclusion also appeared to bar coverage, the court found the Contracted Persons Exclusion alone sufficient to deny coverage:
“Since ‘one exclusion applies there can be no coverage,’ and the Court need not decide whether the Condominium Exclusion or the Independent Contractors Exclusion also bars coverage…. The only ‘reasonable interpretation’ of the Contracted Person Exclusion is that it bars coverage for injuries to an employee of a subcontractor that was hired, on behalf the insured, to work on the insured’s project.”
96-16th St., LLC v. Penn-Star Ins. Co ., 2025 U.S. Dist. LEXIS 189652 (S.D.N.Y. Sep. 26, 2025)
