In a stunning legal reversal, a Texas state appeals court has overturned Exxon Mobil’s $25 million judgment, ruling that the energy giant’s excess insurer, Lexington Insurance Co., is not obligated to cover a $35 million settlement tied to a 2013 plant explosion. The decision underscores the far-reaching impact of employer liability exclusions in insurance law.
Court Rules Exxon’s Coverage Blocked by Policy Exclusion
A three-judge panel ruled that the trial court erred in its previous decision, finding that Exxon was ineligible for coverage under Lexington’s policy. The key factor? Exxon’s participation in an owner-controlled insurance program (OCIP), which provided workers’ compensation coverage for subcontractors from Brock Services Ltd.
Because Texas labor law considers Exxon the statutory employer of the injured Brock workers, the “employer’s liability exclusion” applied, negating coverage.
Exclusion Language Seals Exxon’s Fate
The court pointed to a crucial provision in Lexington’s policy: Coverage is barred when an insured employee suffers a work-related injury, regardless of whether the insured is liable “as an employer or in any other capacity.”
