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Construction Insurance Bulletin

Two Weird Conditions for Which Employers of Construction Workers Are Potentially Not Liable for Injury

By December 5, 2014No Comments

Construction sites are dangerous places. Not only do contractors comply with the state worker’s compensation laws, they also follow the mandates for construction company owners regulated by the Occupational and Health Safety Administration (OSHA). In most state’s, construction employees have the “exclusive remedy” of coverage provided by worker’s compensation. But, construction sites are usually busy places with a myriad of sub-contractors and equipment provided by third parties not working on the construction site. When a worker suffers an injury on a building site, sometimes employers aren’t responsible and the employee files a personal injury lawsuit against a third-party. Following are scenarios where the employer may have no liability for an injury and the employee looks for recourse from a third-party.

Injuries or Fatalities Caused By an Employee of a Different Contractor

This is often the reason for an employee seeking compensation from a personal injury lawsuit. Imagine that a worker for an electrical subcontractor has an injury or suffers a fatality from a falling object such as a heavy hand tool or a cinder block. A careless employee of the plumbing subcontractor is the person who dropped the object. In this case the defendants in a personal injury lawsuit can include, the worker who dropped the tool, the employer of the worker, the general contractor and the project owner. In most cases, subcontractors must give proof of liability insurance through a construction general liability policy (CGL) or a Business Owner’s Policy (BOP). Since it is unlikely that the employee causing the accident has much in the way of financial resources, the final liability is likely the subcontractor/employer. This is because most construction contracts include indemnity and hold-harmless clauses.

Product Liability Lawsuits

There are lots of dangerous equipment in use on construction sites. An example is a carpenter employed by a subcontractor suffers an injury from a handsaw with a safety defect. An automatic cutoff failed to work while the saw was in use and an employee lost his thumb. While this seems to fall into the realm of WC insurance, on review, it is not so clear. Perhaps it is the liability of the manufacturer, distributor, or installer of the equipment (such as rigging and scaffolding). In these cases the employee is likely to file a personal injury lawsuit against one or all of these businesses. This is especially true if WC denies the case based on product liability.

Contractors, be alert for your state’s rules on Worker’s Compensation and Personal Injury lawsuits. Every state has their own worker’s compensation rules and regulations – in some states if a third-party caused the injury, then worker’s compensation may not cover the incident, while in other states the employee can successfully file a WC claim and file a personal injury lawsuit.

Always complete an employee injury report immediately. Tell your broker about the accident. Insurance brokers often communicate with carriers about the injury and can let you know if the case is likely to be approved as a WC case or not. It is also a good idea to speak with an attorney about the likelihood of a lawsuit against the employer of the responsible party or part of the distribution chain for faulty equipment has a chance of success.