Hall of Shame – Injury to Independent Contractors Exclusion Creates Severe Coverage Gap
This exclusion removes coverage for any work done by an independent contractor: Here is an outline of an everyday exposure for a typical (ABC) company that utilizes subcontractors (as you know, there are not many companies who do not use a subcontractor in some capacity): This exclusion removes coverage for any claims arising out of an injury to a subcontractor’s employee. This exclusion removes coverage for any claims arising out of an injury to a subcontractor’s employee.
- 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.
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?
The SolutionWhat 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.
We realize that a coverage issue like this can be complicated. It’s not easy to see or find this wording in your policy.
How KMRD Can Help:
KMRD delivers risk management and human capital solutions to over 600 clients nationwide. Our award-winning team, disciplined approach, proven processes, combined with our risk management portal make KMRD the leading choice to improve business protection and reduce the overall cost of risk.