Workers Compensation and the HO Policy

Transcription

1 Workers Compensation and the HO Policy Sponsored By:

2 WORKERS COMPENSATION & THE HO POLICY Robin Federici, CPCU, AAI, ARM, AINS, AIS, CPIW

3 WORKERS COMPENSATION (WC) LAW WC insurance is unique in that it is closely tied to state law. Even though all 50 states & DC have WC laws, and each law has the same basic objective of providing no-fault benefits to workers injured on the job, no two states' WC laws are identical. In fact, the specific provisions of WC laws vary considerably from state to state.

4 WORKERS COMPENSATION (WC) LAW No state WC law covers all types of employees one such class that MAY BE EXEMPT is Domestic Workers. A domestic worker is a person who performs tasks within the employer's household These workers perform a variety of household services that range from providing Care for children & elderly parents Housekeeping Cooking, and Home maintenance.

5 OUR CHALLENGE Your insured has decided to act as their own general contractor and build an addition to their home. They will be hiring several sub-contractors to take on parts of the project. Along with the construction project, the insured has just hired a nanny and a gardener. Unfortunately, the insured is now informing you about these exposures when reporting the serious injury sustained by one of these hired parties. Is there any coverage? What if a person, doing work for the insured, injuries another and the insured is sued? Is there any coverage?

6 THE EMPLOYER ISSUE SUB-CONTRACTORS NANNY GARDENER

7 WC & WHO IS AN EMPLOYEE An overview of who is an employee is someone that: Is paid by the employer Does duties that pertain to the employer s usual trade or business These duties are under the control of the employer

8 MA WC Law M.G.L. 152 Who is an employer? 5) "Employer'', an individual.. HOWEVER, that the owner of a dwelling house having not more than three apartments and who resides therein, or the occupant of a dwelling house of another who employs persons to do maintenance, construction or repair work on such dwelling house or on the grounds or buildings appurtenant thereto shall not because of such employment be deemed to be an employer...

9 MA WC Law M.G.L. 152 Who is an employee? "Employee'', every person in the service of another under any contract of hire, express or implied, oral or written... EXCEPT (g) a person whose employment is not in the usual course of the trade, business, profession or occupation of his employer

10 MA WC Law M.G.L. 152 Who is an employee? The provisions of this chapter SHALL REMAIN ELECTIVE as to employers of seasonal or casual or part-time domestic servants. For the purpose of this paragraph, a part-time domestic servant is one who works in the employ of the employer less than sixteen hours per week.

11 THE ANSWERS TO THE EMPLOYER ISSUE In MA: A homeowner, who hires contractors, IS NOT considered an employer Domestic employees present a challenge. The answer is based on the number of hours the person works weekly

12 Employee vs. Independent Contractor Massachusetts: M.G.L. chapter 149, Section 148B

13 WC & WHO IS AN INDEPENDENT CONTRACTOR Who is an independent contractor is a complex issue. A simplistic overview of who is an independent contactor is someone: Who provides their own tools and equipment Directs their own time and work, and chooses to hire others to do all of some of the function(s) Who is required to complete a promised job, and does this activity for others

14 INDEPENDENT CONTRACTOR Guidelines or Criteria vary by state 1) Who controls the work 2) Who has the right to hire/fire 3) Who provides the tools and supplies

15 INDEPENDENT CONTRACTOR In MA, a person performing any service shall be considered an employee UNLESS: 1. the individual is free from control and direction 2. the service is performed outside the usual course of the business of the employer; and 3. the individual is customarily engaged in an independently established trade, occupation, profession

16 ISO HO POLICY THE HIRED HELP

17 ISO HO POLICY Definitions "Residence employee" means: a. An employee of an "insured", or an employee leased to an "insured" by a labor leasing firm, under an agreement between an "insured" and the labor leasing firm, whose duties are related to the maintenance or use of the residence premises", including household or domestic services;...

18 ISO HO POLICY Definitions The HO 00 & later versions has added an additional definition Employee means an employee of an insured, or any employee leased to an insured by a labor leasing firm under an agreement between an insured and the labor leasing firm, whose duties are other than those performed by a residence employee

19 ISO HO POLICY Definitions "Insured" means: c. Under Section II: (1) With respect to animals or watercraft to which this policy applies, any person or organization legally responsible for these animals or watercraft which are owned by you or any person described in 5. a. or b. (2) With respect to a "motor vehicle" to which this policy applies: (a) Persons while engaged in your employ or that of any person described in 5. a. or b.; or

20 LIABILITY ISSUES Injuries to sub-contractors or domestic employees Claims brought against the insured arising out of the acts of another

21 2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent... ISO INSURING AGREEMENTS A. Coverage E Personal Liability If a claim is made or a suit is brought against an "insured" for damages because of "bodily injury" or "property damage" caused by an "occurrence" to which this coverage applies, we will: 1. Pay up to our limit of liability for the damages for which an "insured" is legally liable; and

22 ISO INSURING AGREEMENTS B. Coverage F Medical Payments To Others We will pay the necessary medical expenses that are incurred or medically ascertained within three years from the date of an accident causing "bodily injury". Medical expenses means reasonable charges for medical, surgical, x- ray, dental, ambulance, hospital, professional nursing, prosthetic devices and funeral services. This coverage does not apply to you or regular residents of your household except "residence employees"...

23 Coverage E & F Exclusions Personal liability and medical payments coverage do not apply to any motor vehicle liability watercraft liability aircraft liability hovercraft liability for an insured's premises that is not an insured location.

24 RESIDENCE EMPLOYEES EXCEPTION TO EXCLUSIONS Exclusions A. "Motor Vehicle Liability", B. "Watercraft Liability", C. "Aircraft Liability", D. "Hovercraft Liability" and E. "Insured's" Premises Not An "Insured Location" do not apply to "bodily injury" to a "residence employee SO...

25 RESIDENCE EMPLOYEES EXCEPTION TO EXCLUSIONS Injuries to a residence employee that occur in the scope of the insured's employment are covered as respects motor vehicle liability, watercraft liability, aircraft liability, hovercraft liability, and insured's premises not an insured location exposures. If John Smith's mechanic injures himself while servicing John's high-powered speedboat, the HO policy will provide liability coverage...

26 ISO WC EXCLUSION Coverage E Personal Liability. Coverage E does not apply to: 4. Bodily injury to any person eligible to receive any benefits voluntarily provided or required to be provided by an insured under any: a. Workers Compensation law

27 ISO SECTION II - EXCLUSION Coverage F Medical Payments To Others. Coverage F does not apply to bodily injury : 2. To any person eligible to receive benefits voluntarily provided or required to be provided under any: a. Workers Compensation law

28 IS WC COVERAGE AN ANSWER, REGARDLESS?

29 HOMEOWNERS ISSUES Even if the HO policy covers claims by an employee, coverage is limited to the HO policy limits which could be grossly inadequate in the event of serious injury, permanent disability, or death. The advantage of workers compensation coverage is that it provides broader protection

30 WC BENEFITS As prescribed by state law Disability Unlimited Medical Rehabilitation Death Benefits So, even if not required by law, it is probably a good idea to consider voluntarily providing WC coverage.

31 HO ENDORSEMENTS WC Voluntary Compensation and Employers Liability Coverage for Residence Employees Endorsement This endorsement is for attachment to a HO policy or other policy that provides personal liability coverage for individuals This endorsement provides voluntary workers compensation coverage for residence employees when coverage is not mandated by law

32 HO ENDORSEMENT WC Workers Compensation and Employers Liability Coverage for Residence Employees Endorsement This endorsement is for attachment to a HO policy or other policy that provides personal liability coverage for individuals This endorsement provides workers compensation coverage for residence employees when required by law or when made available through voluntary election under the law.

33 Workers Compensation (WC) Part 1 = Workers Compensation Part 2 = Employers Liability Part 3 = Other States

34 No fault Workers Compensation (WC) Part 1 = Workers Compensation Work related: Arising out of and in the course of employment Occupational Injury and Disease Pays: Disability, medical, rehabilitation and death benefits as required by the state

35 Fault Workers Compensation (WC) Part 2 = Employers Liability Claims: Gross negligence, spouses/dependents, third party over, & dual capacity Limits: $100,000 for BI $500,000 Aggregate $100,000 for disease

36 Workers Compensation (WC) Part 3 = Other States Insurance Other states not listed in Part 1 Excludes monopolistic states: North Dakota, Ohio, Washington, Wyoming Excludes states the insurer is not licensed to do business in

37 WC ENDORSEMENT VOLUNTARY COMPENSATION AND EMPLOYERS LIABILITY COVERAGE ENDORSEMENT (WC ) This endorsement is for attachment to a WC policy It provides voluntary coverage for the WC benefits to employees who are not covered by state WC law

38 WC ENDORSEMENT VOLUNTARY COMPENSATION AND EMPLOYERS LIABILITY COVERAGE ENDORSEMENT (WC ) Employees include the following: Domestic workers Agricultural workers Volunteers Employees injured while temporarily outside of the United States or Canada Employees injured while on indefinite assignment outside of the United States or Canada

39 Robin Federici, CPCU, AAI, ARM, CPIW