It is agreed that this insurance does not apply to "bodily injury," "property
damage" or "personal and advertising injury to:
- Any independent contractor or the employee of any independent contractor while such
independent contractor or their employee is working on the behalf of any insured; or
- Any independent contractor or the employee of any independent contractor while such
independent contractor or their employee is working on the job site, but not working on
the behalf of any insured; or
- The spouse, child, parent, brother or sister of such independent contractor or employee
of the independent contractor as a consequence of (1) and (2) above.
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This exclusion removes coverage for any claims arising out of an injury to a subcontractor's
employee.
Here is an outline of an everyday exposure for a typical (ABC) company that utilizes subcontractors
(as you know, there are not many companies that do not use a subcontractor in some capacity):
- Employee of Subcontractor gets injured.
- Employee collects WC from Subcontractor's Workers Compensation policy. Employee of Subcontractor
sues for "the big bucks" alleging ABC's negligence contributed to the injury.
- Carrier Refuses to cover ABC.
What should happen without this exclusion and the support of KMRD's contractual risk transfer
assistance.
- ABC's carrier defends ABC.
- ABC's carrier pursues the subcontractor's General Liability carrier for coverage based on
the Additional Insured / Indemnification (Contractual Risk Transfer) provisions of the contract.
The problem? No one read the policy! The exclusion in this example should be avoided at
all costs! The really surprising thing is that this exclusion was on a policy that insured
a contractor that subcontracted 95% of their work!
Are you exposed to this risk? Would you know where to look or how to ask the question?
We realize that a coverage issue like this can be complicated. It's not easy to see or
to find in your policy. If you would like us to explain this issue in more detail, feel
free to call us.
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