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One of Sam’s employees was injured when he fell from defective scaffolding. The injured employee will be paid the Workers’ Compensation medical and indemnity benefits required by the state under Sam’s Workers’ Compensation policy. However, the employee was advised that he could also sue Carl Contractor for his negligence in failing to provide proper supervision of the job. In Pennsylvania and Delaware an employee can collect Workers’ Compensation and also sue a third party. In Maryland the employee can either collect Workers’ Compensation or sue a third party, but not both. Incidentally, Maryland is one of seven states that have this provision. If Sam’s employee does sue Carl, then Sam’s Commercial General Liability insurer will have to defend and, if necessary, indemnify Carl as per the

indemnification provisions of the contract. Sam’s CGL policy excludes bodily injury to an employee during the course of employment. However, the exclusion does not apply to any liability assumed under an insured contract. The definition of insured contract includes this construction contract between Carl and Sam. If the injured employee does not sue Carl: w In Pennsylvania the employer is subrogated to the rights of the employee;

However, in either case, whether the employee sues Carl or not, Sam and his insurer are blocked from any recovery from Sam. Why? The waivers of subrogation, that’s why. Why can the employee sue Carl? The employee is not bound by the waiver — just Sam and his insurer. Now you know why insurers want contractors to require their subcontractors hold them harmless and also procure certain policies of insurance. Y’all take care!

w In Maryland the Workers’ Compensation insurer may bring an action against Carl; and w In Delaware the employer or the Workers’ Compensation insurer can file an action on behalf of the employee.

HELPING AGENCIES AVOID COSTLY E&O CLAIMS That’s how we deliver distinction.

IA&B HAS OVER 50 YEARS OF EXPERIENCE TRAINING AGENCY STAFF By attending IA&B training programs, your staff will have the skills to provide proper coverage and avoid costly E&O claims. No one knows E&O like IA&B. Don’t trust your employee training to anyone else. FOR MORE INFORMATION, VISIT IABGROUP.COM OR CALL THE IA&B MEMBER SERVICE CENTER AT (800) 998-9644.

Driving members to distinction

Primary Agent - August 2010 - PA Edition  

Primary Agent - August 2010 - PA Edition