In a recent unpublished decision, Babwari v. State Farm Fire & Casualty Co., the Eleventh Circuit delivered a significant reminder for policyholders and insurers alike: commercial general liability (“CGL”) policies are not a backdoor substitute for workers’ compensation coverage. The case arose from a tragic set of facts. Amanali Babwari, a convenience store clerk in Birmingham, Alabama, was shot multiple times while leaving work late one night. After obtaining a consent judgment against his employer for nearly $900,000, Babwari pursued the employer’s insurer, State Farm, under Alabama’s direct-action statute. The central question on appeal was whether the employer’s CGL policy covered the injuries. The district court answered “yes,” finding that the injuries resulted from covered negligence and that no policy exclusion applied. The Eleventh Circuit disagreed, reversing and holding that the policy’s employer liability exclusion barred coverage as a matter of law. (full disclosure – your writer represented State Farm in this case).
The decision turned on a standard—but often misunderstood—policy provision: the employer liability exclusion. This exclusion bars coverage for injuries “arising out of and in the course of” employment. The Eleventh Circuit emphasized that this language is not accidental—it mirrors workers’ compensation statutes and carries the same meaning. Relying heavily on Alabama workers’ compensation jurisprudence, the court applied a two-part test: (1) whether the injury “arose out of” employment (i.e., a causal connection), and (2) whether it occurred “in the course of” employment (i.e., within the time, place, and circumstances of employment). Both prongs were satisfied. The employee was working a late shift, was required to park in a poorly lit area, and was attacked on the employer’s premises immediately after clocking out. Even though he was technically off the clock, the circumstances tied the shooting closely to his employment. That was enough. The result was a straightforward but powerful conclusion: if an injury would fall within the employment relationship under workers’ compensation principles, it is likely excluded from CGL coverage. Here, the court found a clear connection. The exclusion applied, and coverage was barred.
The court underscored a fundamental principle of insurance structure: CGL policies cover liability to the public, not to employees. Employer liability exclusions exist specifically to prevent overlap with workers’ compensation and employers’ liability policies. Allowing coverage here would have blurred that line. Instead, the court enforced the exclusion as written, reiterating that unambiguous policy language must be applied according to its terms.
Babwari advanced several arguments to avoid the exclusion, including that workers’ compensation principles should not control and that the attack was motivated by personal criminal conduct. The court rejected each, explaining that the policy’s language expressly incorporates the workers’ compensation framework and that the focus is on the employment relationship—not the attacker’s motive.
For businesses, individuals, insurers, and their counsel, the decision offers several practical lessons:
- Policy language matters—and courts will enforce it as written. Attempting to reframe employee injuries as general negligence claims will not avoid a well-drafted exclusion.
- “Off-the-clock” does not necessarily mean “outside employment.” Injuries occurring on or near the workplace, even after hours, may still be considered employment-related.
- Coverage planning is essential. Ensuring the right mix of workers’ compensation, employer liability, and CGL coverage can prevent costly gaps.
The Eleventh Circuit’s decision is a reminder that coverage disputes often turn on foundational principles. For businesses, the takeaway is simple but critical: understanding how your policies work together is just as important as having them in place. Although unpublished, Babwari is a useful illustration of how courts approach employer-related exclusions—and a cautionary tale for plaintiffs attempting to access CGL proceeds for workplace injuries.
