Tag Archives: employer’s liability

QUICK NOTE: PROCURE WORKER’S COMPENSATION IN THE NAME OF YOUR COMPANY IF YOU ARE A GENERAL CONTRACTOR

Posted on by

If you are a general contractor (or the contractor responsible for hiring subcontractors), please make sure to procure a worker’s compensation and employer’s liability insurance policy.  Also, don’t think you are “fully covered” if you have worker’s compensation through a professional employer’s organization, otherwise known as a PEO. If you go with a PEO, or are statutorily exempt from worker’s compensation, then you need to make sure ALL of the subcontractors you hire have worker’s compensation and employer’s liability insurance. No exception. Ever. The risk is much greater than any reward.

In construction under Florida law, the general contractor is deemed the “statutory employer” for purposes of worker’s compensation.  This means that if a subcontractor does not have worker’s compensation, then the general contractor’s worker’s compensation policy is required to cover injuries.  So, if a person under a subcontractor gets hurt, and the subcontractor does not have worker’s compensation insurance, then the general contractor is deemed the statutory employer for purposes of worker’s compensation.

What if the general contractor has worker’s compensation through a PEO? This does not matter as the general contractor is still deemed the statutory employer. But, unlike traditional worker’s compensation insurance, the general contractor won’t have insurance to cover the risk.  The reason being is that with a PEO, your employees get leased back to you so the leasing company is the company with worker’s compensation insurance, not the contractor. If a non-employee gets hurt, or someone not enrolled through the leasing company, there is NO worker’s compensation insurance for that hurt person. This means the general contractor, or the statutory employer, has liability for the injury risk but does not have insurance to cover the risk. To avoid this dynamic, consider two crucial things:

First, procure a worker’s compensation and employer’s liability policy. Not through a PEO, but in your company’s name.

Second, if you feel like the PEO is the most prudent option regardless of the risk, or don’t have employees and are otherwise statutorily exempt, then you need to make sure everyone you hire has worker’s compensation and employer’s liability insurance. Don’t make exceptions.

 

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.

SEPARATION OF INSUREDS PROVISION IN CGL POLICIES

Posted on by

CGL policies contain a “Separation of Insureds” provision.  This provision oftentimes states:

Except with respect to the Limits of Insurance, and any rights or duties specifically assigned this Coverage Part to the first Named Insured, this insurance applies:

1. As if each named insured were the only Named Insured; and

2. Separately to each insured against whom claim is made or “suit” is brought.

This provision is designed to “create separate insurable interests in each individual insured under a policy, such that the conduct of one insured will not necessarily exclude coverage for all other insured.”  Evanson Ins. Co. v. Design Build Interamerican, Inc., 569 Fed.Appx. 739 (11th Cir. 2014).  This provision also allows one insured under the policy (e.g., additional insured) to sue another (e.g., named insured) without violating potential coverage because there are separate insurable interests.   This is a valuable provision in CGL policies.

The case of Taylor v. Admiral Ins. Co., 187 So.3d 258 (Fla. 3d DCA 2016) exemplifies the application of the Separation of Insureds provision, particularly when there is an additional insured.  In this case, a person attended an event at a location owned by Miami-Dade County that was hosted by her employer.  As she was leaving the event, she slipped and injured herself.   Her employer had a CGL policy that had a blanket additional insured endorsement that made the County an additional insured.  The employee, through a Coblentz agreement entered into with the County (since the CGL carrier refused to tender a defense to the County) sued her employer’s CGL policy for coverage as an assignee of the County.   The CGL carrier argued that the employer’s liability exclusion precluded CGL coverage.  The employer’s liability exclusion, in a nutshell, precludes coverage for bodily injury claims from the insured’s employees, subcontractors, etc.  This exclusion can be modified by endorsement that expands the scope so keep an eye out on this endorsement.

The Third District Court of Appeal held that the Separation of Insureds provision precluded the application of the employer’s liability exclusion as to the additional insured. The Separation of Insureds provision allowed coverage for the employee’s claim against the County (an additional insured) since the County had a separate insurable interest under the policy.  Since the County was not the employee’s employer, and under the Separation of Insureds provision the County was separately insured under the policy, the employer’s liability exclusion did not apply to the County as an additional insured.

Notably, other cases around the country, that have modified the employer’s liability exclusion through endorsement, have come up with a different conclusion.

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.