John M. Kirby July 5, 2014

In an unpublished case decided by the North Carolina Court of Appeals on February 5, 2013, the Court held that an exclusion for injury to a leased employee was not covered under an automobile insurance policy.

In this case, the employer (Brinley's Grading) used the services of a worker (Mr. Paul), through an employee-leasing company (ProTech). Mr. Paul sustained fatal injuries when an employee of the employer started a vehicle, which moved forward and struck Mr. Paul. The Estate sought coverage for the injuries under the liability portion of the auto policy issued to Brinley's The primary issue on appeal was whether an exclusion for "bodiliy injury to an employee of the insured arising out of and in the courseof employment by the insured or performing the duties related to the conduct of the insured's business" applied. The term "emploee" specifically included a "leased worker," which was further defined. The Court held that the insurer had a duty to defend the wrongful death action based on the allegations of the complaint, but that it did not have a duty to provide coverage for the employer because the facts showed that the exclusion applied. The court also held that whether coverage was afforded for Mr. Brinley individually created an issue of fact. (In another opinion issued the same day, however, the Court of Appeals affirmed a decision which ruled that Mr. Brinley was not individually liable.) The entirety of the decision is difficult to summarize. Of some import is a part of the opinion addressing the Financial Responsibility Act, which generally requires that auto policies provide a minimum of coverage, and exclusions not authorized by the FRA are invalidated (at least below $30,000 in coverage). The Court seemingly held that the FRA did not provide coverage in view of workers compensation. This portion of the opinion is complicated because of more recent enactments regarding the interplay between UIM coverage and workers compensation. Another interesting portion of the opinion is whether the plaintiff would have had "uninsured motorist coverage," but the court held that the plaintiff had not properly asserted such a claim. The decision of Nationwide v. Brinleys addresses an important exclusion in auto policies in North Carolina.