HOLOHAN, Justice.
A declaratory judgment action was brought by appellant Stearns-Roger Corporation (Stearns) and Phelps-Dodge Corporation (Phelps-Dodge) asking that an insurance policy issued by appellee Hartford Accident and Indemnity Company (Hartford) be construed to afford coverage as to a particular accident. Motions for summary judgment were filed by both parties. The trial court granted summary judgment in favor of Hartford and denied coverage. Stearns filed an appeal from the judgment of the Superior Court. Thereafter Hartford moved in the Court of Appeals to dismiss Stearns’ appeal prior to the time briefs were filed on the basis that Stearns lacked standing. This motion was denied. The Court of Appeals reversed the decision of the trial court.
Stearns-Roger Corporation
v.
Hartford,
117 Ariz. 132, 571 P.2d 278 (App.). Hartford filed a petition for review which was accepted by this court. The opinion of the Court of Appeals is vacated. The judgment of the Superior Court is affirmed.
In 1967, Stearns, an engineering construction firm based in Colorado, entered into a long-term construction agreement with Phelps-Dodge for work to be performed at Phelps-Dodge’s Morenci substation. Pursuant to this construction agreement Stearns agreed to procure comprehensive public liability insurance.
In addition, Stearns also obtained workmen’s compensation coverage in a separate policy from Hartford*.
Under the public liability insurance policy, Stearns was the named insured and Phelps-Dodge, though not expressly named, was an additional insured.
During the course of the construction two employees of
the named insured, Stearns, were injured and filed suit against Phelps-Dodge. The injury of each employee occurred while doing Stearns’ work, yet each workman contended that the negligence was that of Phelps-Dodge. Phelps-Dodge then tendered the defense of the action to Hartford pursuant to the Hartford-Stearns insurance policy. Hartford refused to defend claiming lack of coverage.
The policy includes the following exclusion upon which Hartford relies:
“This insurance does not apply
“(c)(1) to any obligation for which the Insured or any carrier as his insurer may be held liable under any workmen’s compensation, unemployment compensation or disability benefits law, or under any similar law, or
“(2) ... to personal injury to any employee of the Named Insured arising out of and in the course of his employment by the insured . . .
Both negligence cases were settled with payment coming from both Phelps-Dodge and to some extent from its liability insurance carrier, American Motors Insurance. In those settlements Phelps-Dodge waived its right to appeal the declaratory judgment; however Stearns’ right to appeal was specifically preserved.
A threshold question presented in this appeal is whether Stearns has standing to contest the decision of the court below.
Stearns contends that the denial of Hartford’s motion to dismiss in the Court of Appeals constitutes the law of the case which precludes Hartford from re-litigating the issue in this court. In dismissing the motion the appellate court merely issued an interlocutory order which does not constitute a judgment which establishes the “law of the case.”
Hartford contends that Stearns lacked standing to maintain the appeal from the declaratory judgment which held that Hartford owes no duty to defend or indemnify Phelps-Dodge. Hartford claims that Stearns would not be a party “aggrieved” by the judgment.
Stearns answers that since the only issue decided in the declaratory judgment was coverage on the Hartford policy for Phelps-Dodge, Phelps-Dodge can still sue Stearns on the theory that it failed to provide insurance coverage as agreed in the contract between Phelps-Dodge and Stearns. If the declaratory judgment were allowed to stand Hartford would plead
res judicata
when Stearns looked to it for relief on the Phelps-Dodge claim. It has been held that if an appellant would be bound by a ruling of the trial court because of the doctrine of
res judicata
a party is sufficiently “aggrieved” to warrant the right of direct appeal.
Maloney v. Taplin,
154 Conn. 247, 224 A.2d 731 (1966);
Nat’l Farmers Union Property and Casualty Company v. Maca,
26 Wis.2d 399, 132 N.W.2d 517 (1965). The judgment in the court below has such a substantial effect on the rights of Stearns that we believe Stearns is a party sufficiently aggrieved to maintain this appeal.
On the merits, it is Stearns’ position that the word “insured” as used in the exclusionary clause refers to a person who is an employee of the insured claiming coverage. In this case since the employees who are injured are not employees of the insured claiming coverage (Phelps-Dodge), the exclusion does not apply and Hartford is obligated to defend Phelps-Dodge. Hartford, on the other hand, argues that the word “insured” refers to the named insured (Stearns) and to the additional insured (Phelps-Dodge). Hartford argues that because employees of the named insured were injured the exclusionary clause applies and Hartford is relieved of its obligation to defend.
Stearns urges that the word “insured” is ambiguous because it could be construed to mean either the named insured or the additional insured. Stearns points out that where there is ambiguity respecting the coverage or terms of an insurance contract it will be construed against the insurer and in favor of the insured.
Federal Insurance Company v. P.A.T. Homes, Inc.,
113 Ariz. 136, 547 P.2d 1050 (1976);
Prudential Insurance Company of America v. Barnes,
285 F.2d 299 (9th Cir., 1960).
The exclusion clause in question reads in part:
“This insurance does not apply
“(2) ... to personal injury to any employee of the Named Insured arising out of and in the course of his employment by the insured . . . .”
Stearns argues that the clause is ambiguous because the terms “Named Insured” and “insured” are both used; hence an interpretation should be employed which favors coverage.
It is one thing to construe an ambiguity, and it is quite another matter to create one. The terms of the insurance policy should be given a practical and reasonable construction which support the intent of the parties. The court should not attempt to revise the policy to increase the risk or extend liability just to accomplish a so-called good purpose.
Wyatt v.
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HOLOHAN, Justice.
A declaratory judgment action was brought by appellant Stearns-Roger Corporation (Stearns) and Phelps-Dodge Corporation (Phelps-Dodge) asking that an insurance policy issued by appellee Hartford Accident and Indemnity Company (Hartford) be construed to afford coverage as to a particular accident. Motions for summary judgment were filed by both parties. The trial court granted summary judgment in favor of Hartford and denied coverage. Stearns filed an appeal from the judgment of the Superior Court. Thereafter Hartford moved in the Court of Appeals to dismiss Stearns’ appeal prior to the time briefs were filed on the basis that Stearns lacked standing. This motion was denied. The Court of Appeals reversed the decision of the trial court.
Stearns-Roger Corporation
v.
Hartford,
117 Ariz. 132, 571 P.2d 278 (App.). Hartford filed a petition for review which was accepted by this court. The opinion of the Court of Appeals is vacated. The judgment of the Superior Court is affirmed.
In 1967, Stearns, an engineering construction firm based in Colorado, entered into a long-term construction agreement with Phelps-Dodge for work to be performed at Phelps-Dodge’s Morenci substation. Pursuant to this construction agreement Stearns agreed to procure comprehensive public liability insurance.
In addition, Stearns also obtained workmen’s compensation coverage in a separate policy from Hartford*.
Under the public liability insurance policy, Stearns was the named insured and Phelps-Dodge, though not expressly named, was an additional insured.
During the course of the construction two employees of
the named insured, Stearns, were injured and filed suit against Phelps-Dodge. The injury of each employee occurred while doing Stearns’ work, yet each workman contended that the negligence was that of Phelps-Dodge. Phelps-Dodge then tendered the defense of the action to Hartford pursuant to the Hartford-Stearns insurance policy. Hartford refused to defend claiming lack of coverage.
The policy includes the following exclusion upon which Hartford relies:
“This insurance does not apply
“(c)(1) to any obligation for which the Insured or any carrier as his insurer may be held liable under any workmen’s compensation, unemployment compensation or disability benefits law, or under any similar law, or
“(2) ... to personal injury to any employee of the Named Insured arising out of and in the course of his employment by the insured . . .
Both negligence cases were settled with payment coming from both Phelps-Dodge and to some extent from its liability insurance carrier, American Motors Insurance. In those settlements Phelps-Dodge waived its right to appeal the declaratory judgment; however Stearns’ right to appeal was specifically preserved.
A threshold question presented in this appeal is whether Stearns has standing to contest the decision of the court below.
Stearns contends that the denial of Hartford’s motion to dismiss in the Court of Appeals constitutes the law of the case which precludes Hartford from re-litigating the issue in this court. In dismissing the motion the appellate court merely issued an interlocutory order which does not constitute a judgment which establishes the “law of the case.”
Hartford contends that Stearns lacked standing to maintain the appeal from the declaratory judgment which held that Hartford owes no duty to defend or indemnify Phelps-Dodge. Hartford claims that Stearns would not be a party “aggrieved” by the judgment.
Stearns answers that since the only issue decided in the declaratory judgment was coverage on the Hartford policy for Phelps-Dodge, Phelps-Dodge can still sue Stearns on the theory that it failed to provide insurance coverage as agreed in the contract between Phelps-Dodge and Stearns. If the declaratory judgment were allowed to stand Hartford would plead
res judicata
when Stearns looked to it for relief on the Phelps-Dodge claim. It has been held that if an appellant would be bound by a ruling of the trial court because of the doctrine of
res judicata
a party is sufficiently “aggrieved” to warrant the right of direct appeal.
Maloney v. Taplin,
154 Conn. 247, 224 A.2d 731 (1966);
Nat’l Farmers Union Property and Casualty Company v. Maca,
26 Wis.2d 399, 132 N.W.2d 517 (1965). The judgment in the court below has such a substantial effect on the rights of Stearns that we believe Stearns is a party sufficiently aggrieved to maintain this appeal.
On the merits, it is Stearns’ position that the word “insured” as used in the exclusionary clause refers to a person who is an employee of the insured claiming coverage. In this case since the employees who are injured are not employees of the insured claiming coverage (Phelps-Dodge), the exclusion does not apply and Hartford is obligated to defend Phelps-Dodge. Hartford, on the other hand, argues that the word “insured” refers to the named insured (Stearns) and to the additional insured (Phelps-Dodge). Hartford argues that because employees of the named insured were injured the exclusionary clause applies and Hartford is relieved of its obligation to defend.
Stearns urges that the word “insured” is ambiguous because it could be construed to mean either the named insured or the additional insured. Stearns points out that where there is ambiguity respecting the coverage or terms of an insurance contract it will be construed against the insurer and in favor of the insured.
Federal Insurance Company v. P.A.T. Homes, Inc.,
113 Ariz. 136, 547 P.2d 1050 (1976);
Prudential Insurance Company of America v. Barnes,
285 F.2d 299 (9th Cir., 1960).
The exclusion clause in question reads in part:
“This insurance does not apply
“(2) ... to personal injury to any employee of the Named Insured arising out of and in the course of his employment by the insured . . . .”
Stearns argues that the clause is ambiguous because the terms “Named Insured” and “insured” are both used; hence an interpretation should be employed which favors coverage.
It is one thing to construe an ambiguity, and it is quite another matter to create one. The terms of the insurance policy should be given a practical and reasonable construction which support the intent of the parties. The court should not attempt to revise the policy to increase the risk or extend liability just to accomplish a so-called good purpose.
Wyatt v. Woodmen Accident and Life Company,
194 Neb. 614, 234 N.W.2d 217 (1975).
Giving a reasonable construction to the clause and the words used it becomes apparent that the policy excludes coverage for personal injury to any employee of the “Named Insured,” Stearns, arising out of and in the course of his employment by the insured, Stearns. The language could have been improved by adding “named” before insured in the final phrase. We believe that it strains common English usage to read any other interpretation into the clause.
Stearns argues that this case is controlled by our decision in
Farmers Insurance Group v. Home Indemnity Company,
108 Ariz. 126, 493 P.2d 909 (1972). The controversy in that case centered on the meaning of the words “the insured” in an exclusion clause. The exclusion clause in
Farmers
was applied in light of the statutory requirements of the Motor Vehicle Financial Responsibility Act. In
Farmers
this court said:
“Obviously the purpose of the exclusion is to protect the owner from the expense of double coverage where his employee is covered by workmen’s compensation. But to apply the exclusion without limitation to defeat coverage of third parties frustrates the purpose of the Financial Responsibility Act.”
Id.
at 129, 493 P.2d at 912.
The construction of the word “insured” in
Farmers
is not controlling because the instant case does not involve construction of contract provisions required by public policy-
From the facts shown in the record the persons injured were employees of Stearns who were injured in the course of their employment with Stearns. We have concluded that under the terms of the insurance policy issued by Hartford to Stearns, there was no coverage for the incident. The judgment of the Superior Court is affirmed.
CAMERON, C. J., STRUCKMEYER, V. C. J., and HAYS and GORDON, JJ., concur.