A sub-contractor employee was severely injured on a jobsite.
The employee has a very long recovery and it is doubtful that he will ever work in construction again. The employee seeks legal counsel to check on his rights to sue. The attorney informs the employee that his employer has already satisfied their legal obligations by securing workers’ compensation coverage that has been paying his medical benefits and lost wages all along. The attorney advises him to seek legal recourse against the general contractor who was in charge of jobsite safety on this project. The suit was filed and served upon the general contractor. The general contractor in turn seeks legal advice and tenders the lawsuit to the subcontractor under a cross-complaint. Now, normally everyone would look to the construction contract to see what the indemnity provision has to say. However, in this case, that will not help; there was no contract. The general contractor contends that the injury would have never happened but for the lack of training and lack of safety procedures by the subcontractor.
What policy responds for the subcontractor?
Is it the General Liability policy? No. There is an exclusion for bodily injury to an employee. The exception for action over claims where liability has been assumed in an “insured contract” does not apply in this case. Even though an indemnity provision does not have to be in writing, an oral contract could suffice to trigger coverage. However, neither the general contractor nor the insured subcontractor contends that such an indemnity agreement exists.
In fact, it will be the Employer’s Liability section of the Workers’ Compensation policy. This type of claim is often referred to as an action over, over action or liability over (synonymous terms). The Employer’s Liability section includes an exclusion for liability assumed under a contract and for this reason, the majority of these types of action over claims often go to the General Liability policy to respond. In this case, there is no contract, therefore the claim will go to the Workers’ Compensation Part B. Keep those limits high!
Marjorie Segale (AFIS, CISC, RPLM, CIC, CRIS, ACSR, CISR)
Director of Education, Insurance Community Center