One of the true values of Workers Compensation law is the “exclusive remedy” provision to the employer. Basically, in return for providing coverage for injuries arising from the job, this provision protects you from being sued by the employee for the injury, regardless of who has been negligent. Thus, the benefits provided automatically by Workers Compensation become the “exclusive remedy” for the injury.
However, there’s one way to bypass this barrier to employer liability. It’s called “third party over.” Let’s say that an employee is injured when the scaffolding on which he’s standing collapses. Workers Compensation pays the claim, so he can’t sue the employer. However he chooses to sue the scaffolding company, alleging improper equipment and installation. He wins a judgment, which leads the scaffolding company to sue the employer/contractor, claiming improper usage of the scaffolding. In effect, the employer/contractor is being sued for damages arising from injury to its own employee — just what Workers Compensation is designed to prevent.
Is such a suit legal? Yes. Because the scaffolding company isn’t the injured person’s employer, there’s no prohibition against his suing them — and Workers Compensation law clearly can’t prohibit the scaffolding company from claiming against the contractor, either contractually or by alleging negligence.
If you face such a situation, would your Workers Compensation coverage protect you (because the claim originated from an injury to an employee)? Or would you have to turn to your General Liability coverage, as you would when sued by an outside party? The answer: Either policy might cover this situation, depending on the basis of the suit. For truly comprehensive protection, you need to carry several types of insurance. No one policy does it all. A claim that might fall just outside the purview of one policy can be either a disaster, or simply a hand-off to another type of coverage.
Keeping your entire umbrella of insurance protection current and coordinated might seem complicated — but that’s where our agency comes in. When it comes to risk management and insurance, helping you focus on what you do best is what we do best.