POWER OF WORKERS COMPENSATION IMMUNITY ON CONSTRUCTION PROJECT

shutterstock_104939294On construction projects, workers compensation immunity is real and it is powerful.  (See also this article.)  Workers compensation immunity is why all general contractors should have workers compensation insurance and they should ensure the subcontractors they hire have workers compensation insurance.  Workers compensation insurance becomes the exclusive form of liability for an injured worker thereby immunizing an employer (absent an intentional tort, which is very hard to prove as a means to circumvent workers compensation immunity).

 

If a general contractor, with workers compensation insurance, hires a subcontractor without workers compensation insurance, the general contractor’s workers compensation insurance will be responsible in the event an injury occurs to a subcontractor’s employee.  The general contractor becomes the statutory employer. 

 

If a general contractor, with or without workers compensation insurance, hires a subcontractor with workers compensation insurance, the subcontractor’s workers compensation insurance will be responsible in the event of an injury to that subcontractor’s employee (including any sub-subcontractor’s employees). This is a main reason why the general contractor wants to ensure the subcontractors it hires has workers compensation insurance.

 

An example of the benefit of workers compensation immunity can be found in the recent case of Gladden v. Fisher Thomas, Inc., 42 Fla. L. Weekly D2441a (Fla. 1st DCA 2017), dealing with a statutorily exempt corporate officer of a sub-subcontractor.  In this case, a general contractor hired two applicable subcontractors.  One of the subcontractors was a flooring subcontractor that subcontracted out a portion of its flooring work to an entity whose owner was statutorily exempt from workers compensation insurance.  This owner claimed he was injured through the actions of the other subcontractor and filed a lawsuit against the general contractor and the other subcontractor for negligence.  He claimed that workers compensation immunity should not apply because he was statutorily exempt from workers compensation.  Both the trial court and appellate court did not buy the owner’s argument.  The owner’s exemption from workers compensation insurance does not equate to an exemption from workers compensation immunity.  He is still bound by workers compensation immunity even if he is statutorily exempt.  His only recourse is confined to a claim against his company that did not procure workers compensation coverage.  That’s it.  “Since the corporate employer reaps the benefit of reduced workers’ compensation premiums for the exempt officer, it makes sense that there is a risk associated with the benefit.” Gladden, supra.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

QUICK NOTE: INSURER’S DENIAL OF COVERAGE WAIVES RIGHT TO ENFORCE POST-LOSS POLICY CONDITIONS

 

imagesThere is ostensibly a big difference between an insurance carrier DENYING coverage and simply asking for additional information, as permitted under the post-loss conditions of a property (first-party) insurance policy, right?  Typically, the answer is yes and there is a big difference.  If an insured refuses to comply with post-loss conditions under their insurance policy, they are shooting themselves in the foot (in most cases) by giving the insurer an out when it comes to coverage.  If an insurance carrier denies coverage, however, the insurance carrier cannot then require its insured to comply with post-loss conditions in the property insurance policy.

 

In a recent decision, Ifergane v. Citizens Property Ins. Corp., 42 Fla. L. Weekly D12198a (Fla. 3d DCA 2017), the appellate court held that there was a factual issue as to whether a letter sent by the insurer constituted a denial of coverage versus a request for additional information per the post-loss policy conditions in the property insurance policy.  This was a significant issue because the appellate court, in a prior appeal in the same case, found that the insured’s non-compliance with participating in an examination under oath would preclude coverage under the property insurance policy.  But, if it turns out that the insurer actually denied coverage first, then the insurer, as a matter of law, waived its right to enforce post-loss policy conditions in the property insurance policy such as requiring the insured to participate in an examination under oath.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

THERE CAN BE AN “OTHER INSURANCE” EXCLUSION IN YOUR AUTOMOBILE POLICY

shutterstock_403780030There is exclusionary language in all insurance policies (as you know) that can operate to bar coverage.  In a recent case example, a company performed maintenance and construction services and had a company automobile liability insurance policy.  The policy, however, excluded from coverage automobiles where there was OTHER INSURANCE available that afforded SIMILAR COVERAGE.  One of the company’s members got into an automobile accident with his personal vehicle which resulted in the company being sued in a personal injury action.  The member had a personal automobile liability insurance policy that insured the vehicle.  The company’s policy had significantly higher limits of insurance than the member’s policy.  

 

Unfortunately, the Eleventh Circuit Court of Appeals held the company’s insurer was NOT required to defend or indemnify the insured-company in the personal injury action because of the exclusionary language in the company’s policy.  In particular, the company’s policy did not apply because the member’s personal automobile liability insurance policy (other insurance) insured the same risk (afforded similar coverage); it did not matter that the limits of liability in the policies were different.  (For more information on this case, click here.)  

 

This case, although dealing with an automobile liability insurance policy, discusses exclusionary language in a policy that deals with other insurance available that provides the same or similar coverage (again, in this case the personal automobile liability insurance policy that covered the member’s vehicle applied which barred coverage under the company’s policy).

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

QUICK NOTE: INSURER MUST COMPLY WITH FLORIDA’S CLAIMS ADMINISTRATION ACT

imagesAs an insured, know YOUR rights under Florida’s Claims Administration Act (Florida Statute s. 627.426).  I wrote an article on this exact topic.  If a third-party claim is asserted, or in the process of being asserted, against you, do yourself a favor and consult a lawyer that can assist you with preserving your insurance coverage rights.  You pay liability insurance premiums for a reason so make sure you are not doing anything that could jeopardize rights under applicable insurance policies.

 

A liability insurer must comply with the Claims Administration Act if it wants to deny coverage based on a coverage defense (e.g., the insured’s failure to cooperate with the insurer).   

 

Once your liability insurer issues you a written reservation of rights letter (“[w]ithin 30 days after it knew or should have known of the coverage defense”), and it will typically issue this written letter, it has three options according to the Claims Administration Act:

 

1)   It can refuse to defend you (i.e., deny coverage);

2)   It can obtain a non-waiver agreement from you; OR

3)   It can retain, independent mutually agreeable counsel to represent you.

 

Again, an insurer’s failure to comply with the Claims Administration will preclude it from raising a coverage defense to later deny coverage.  See Geico General Ins. Co. v. Mukamal, 42 Fla.L.Weekly D1833a (Fla. 3d DCA 2017) (discussed here, and explaining that an insurer has only three options per the Claims Administration Act and it must select an option even if the insured’s conduct prevented the insurer from selecting one of the options).

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.