A Texas appellate court has made a significant ruling regarding an insurance dispute involving Exxon Mobil Corporation. The court recently overturned a $25 million judgment that had been awarded to Exxon in its case against Lexington Insurance Company. This decision has important implications for both insurers and corporate policyholders.
The case dates back to an explosion at Exxon’s Beaumont refinery in April 2013, which occurred during a maintenance project. Exxon had hired Brock Services, Ltd. to provide scaffolding services. Under their agreement, Brock was designated as an independent contractor and was responsible for obtaining various types of insurance, including workers’ compensation. However, Exxon opted to provide this coverage through an Owner Controlled Insurance Program (OCIP), which included workers’ compensation and employer’s liability policies for Brock and its employees.
Following the explosion, three Brock employees were injured and received workers’ compensation benefits under the OCIP. They subsequently filed a lawsuit against Exxon for personal injuries. Exxon settled these claims for approximately $35 million and sought reimbursement from Lexington for $25 million under an umbrella policy issued to Brock, claiming it was an additional insured.
Initially, an arbitration panel determined that Exxon was indeed an additional insured under the Lexington policy but did not address whether any exclusions applied. The trial court later upheld this arbitration decision and granted Exxon the full amount it sought, along with interest and attorney’s fees.
Lexington, however, appealed the ruling, arguing that the umbrella policy’s "Employer’s Liability" exclusion should prevent coverage, even if Exxon was an additional insured. The appellate court sided with Lexington, stating that Exxon was considered a statutory employer under Texas law because it had procured workers’ compensation coverage for the injured employees. This classification meant that the workers were treated as employees of Exxon for liability purposes, and thus the exclusion applied to their claims.
The court explained that the exclusion was valid regardless of the capacity in which Exxon was being sued. It also rejected Lexington’s argument regarding a separate exclusion for workers’ compensation obligations, determining that Exxon was not seeking coverage for those obligations but rather for indemnity related to third-party claims.
Ultimately, the court ruled that due to the Employer’s Liability Exclusion, Lexington had no duty to defend or indemnify Exxon. The judgment was reversed, and Exxon was ordered to recover nothing from the policy.
This ruling highlights the importance of understanding how insurance policies work, particularly in complex arrangements like OCIPs. Insurers and corporate risk managers must carefully evaluate how statutory employer status can affect coverage under umbrella policies. The case serves as a reminder that even when a company qualifies as an additional insured, specific exclusions can still limit coverage based on the circumstances.
The decision was made by the Ninth Court of Appeals in Beaumont and is cited as Lexington Insurance Company v. Exxon Mobil Corporation and ExxonMobil Oil Corporation, No. 09-22-00174-CV, with the judgment rendered on April 3, 2025.