Fellow Employee Exclusion
Also known as: Fellow Servant Exclusion, Co-Employee Exclusion
The fellow employee exclusion removes coverage for bodily injury one employee causes to a coworker arising out of and in the course of employment. The logic ties back to exclusive remedy: when a worker is hurt on the job, workers' compensation is meant to be the sole avenue of recovery, so the auto or liability policy is not expected to also defend the coworker whose negligence contributed to the injury. In a company-vehicle crash, this means the driving employee is not an insured for a claim brought by an injured passenger who is also an employee.
For a small-business buyer, the exposure this creates is easy to underestimate. Workers' compensation pays the injured employee's statutory benefits, but an injured worker, or the family in a fatality, may still sue the coworker driver personally in tort. Because of the exclusion, that coworker has no defense or indemnity from the company's auto policy, and the individual's own assets are on the line. This is a classic action-over and employee-liability gap that overlaps with employers liability under the workers' comp program.
The practical nuance is that the exclusion is frequently buyable back. Many carriers offer a fellow-employee coverage endorsement that restores protection for the co-employee, and businesses with crews riding together in company vehicles should strongly consider it. Coordinate this decision with your workers compensation and employers-liability coverage so a single job-site accident does not leave a valued employee personally exposed to a lawsuit the policy was assumed to cover. Found among the Section II liability exclusions of ISO's Business Auto Coverage Form (CA 00 01), it channels a worker's on-the-job injury caused by a co-worker into workers' compensation, reinforcing the exclusive-remedy bar under state WC statutes.
Real-world scenario
Sunbelt HVAC Services LLC runs a fleet of 14 service vans across Phoenix and carries a commercial auto policy with a $1,000,000 combined single limit, a $1,000 collision deductible, and an annual premium of $18,400. Alongside it, the company pays $42,000 a year for workers' compensation, which bundles a $1,000,000 employers liability sublimit under Part Two.
On a July morning, technician Marco drives a $38,000 company van with co-worker Devin riding along to a rooftop install. Marco runs a red light and T-bones a sedan. Devin fractures three vertebrae, generating $185,000 in medical bills and $60,000 in lost wages, all paid by the workers' comp carrier. Devin's personal-injury attorney then files a $750,000 lawsuit against Marco individually, hoping to reach the $1,000,000 auto liability limit for pain and suffering. Because Marco and Devin are co-workers injured in the course of employment, the fellow employee exclusion in the commercial auto policy bars the auto insurer from defending or indemnifying that claim; the loss is funneled back to workers' comp, the exclusive remedy.
Sunbelt's controller had reserved $12,000 for a possible auto defense, but the exclusion meant the auto insurer spent $0 on Devin's claim. Devin's separate third-party suit against the at-fault sedan driver settled for $220,000, and the comp carrier asserted a $95,000 subrogation lien to recover part of its $245,000 payout. A related employers liability demand for $150,000 was ultimately resolved for $40,000.
How it affects your premium
The fellow employee exclusion is a standard, no-cost provision baked into most commercial auto and general liability forms rather than a separately rated coverage, but whether you can buy it back or narrow it — and what it costs your overall program — turns on these drivers:
- Whether a "fellow employee coverage" buy-back is added — endorsing the auto policy to cover employee-vs-employee suits can add 5%-15% to the auto premium and is priced against payroll and passenger exposure.
- Passenger and crew exposure — trades that routinely carpool crews (HVAC, roofing, landscaping) present more co-worker injury risk than a single-driver operation, raising the loss potential the exclusion is meant to backstop.
- Workers' compensation adequacy — because injured co-workers are pushed to the workers' compensation system, a thin or lapsed comp policy (or operating in a monopolistic state) magnifies the gap the exclusion leaves.
- Employers liability limit — a higher Part Two limit (e.g., $1,000,000 vs. $500,000) softens the blow when the exclusion pushes a claim off the auto tower.
- State law variation — a handful of states restrict or void fellow-employee exclusions, forcing carriers to price the retained exposure into the base auto rate.
- Fleet size and driver quality — more vehicles and worse MVRs raise crash frequency, indirectly increasing how often the exclusion gets tested.
Common misconceptions
Myth: The fellow employee exclusion means my injured worker gets nothing.
Reality:
The injured co-worker is still fully covered — just through workers' compensation instead of the auto or liability policy. The exclusion only blocks a duplicate liability recovery, not the medical and wage benefits comp provides.
Myth: This exclusion protects my business from every co-worker lawsuit.
Reality:
It bars the injured employee's own liability claim, but it does not stop an action-over claim where a third party sues your business and pulls the employee-injury issue back in, which is why employers liability and severability matter.
Myth: Because of severability of interests, each employee is a separate insured, so co-worker suits are covered.
Reality:
Severability of interests treats each insured separately for most purposes, but the fellow employee exclusion is written to apply specifically to injuries employees cause one another, overriding severability for that scenario.
Frequently asked questions
Why does my commercial auto policy exclude injuries to a fellow employee?
Insurers assume co-worker injuries are handled by workers' compensation, so the auto policy excludes them to avoid paying twice for the same loss and to reinforce comp as the exclusive remedy.
Can I buy coverage back for employee-versus-employee claims?
Some carriers offer a fellow-employee coverage endorsement on the auto or general liability policy, typically for an added premium, though availability depends on your state and class of business.
Does the exclusion apply if the driver was off the clock?
Generally no — it applies only when both employees are acting in the course and scope of employment. An injury during purely personal use may fall outside the exclusion, so review the policy language and your business auto symbols.
How is this different from employers liability coverage?
The fellow employee exclusion removes co-worker suits from the auto/GL policy, while employers liability (Part Two of workers' comp) is the coverage that actually responds to certain suits arising from workplace injuries.
Are there states where the fellow employee exclusion is not enforceable?
Yes — a minority of states limit or void these exclusions in commercial auto policies, so enforceability depends on where the vehicle is garaged and where the injury occurs.
Sources cited
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