INSURANCE FOR LARGE CONSTRUCTION EQUIPMENT SUCH AS A CRANE

Posted on July 13, 2018April 27, 2020 by Edward Garber

Many, many projects require the use of a crane. The skyline is oftentimes filled with the sight of cranes—one after the other. Most of the time, the cranes are leased from an equipment supplier. What happens if the crane (or any large, leased equipment) gets damaged?

I wrote an article regarding a builder’s risk carrier NOT covering damage to a crane from a storm based on a common exclusion. Another case, Ajax Bldg. Corp. v. Hartford Fire Ins. Co., 358 F.3d 795 (11^th Cir. 2004), had a similar result.

In this case, a prime contractor leased a crane from an equipment supplier. The crane was used by the structural concrete subcontractor. The crane collapsed during the subcontractor’s work. The supplier sued both the contractor and subcontractor. The prime contractor was defended under a contractor’s equipment liability policy and the subcontractor was defended under a general liability policy it procured for its work on the project. Ultimately, a settlement was reached where the subcontractor’s liability insurer paid a bulk of the damage.

However, the subcontractor’s insurer, through subrogation rights, pursued a claim against the builder’s risk carrier for the project arguing that the damage to the crane was an insured risk under the builder’s risk policy and its difference-in-conditions (DIC) supplemental endorsement to the builder’s risk policy. The insurer argued that coverage was excluded per the following exclusion:

Coverage

a. Structures … fixtures, equipment, machinery and similar property which will become a permanent part of the structure …

Property NOT Covered [Exclusion]

a. Machinery, tools, equipment, or other property which will not become a permanent part of the structure(s) described in the Declarations or Schedule unless the replacement cost of such property is included in the contract price and reported to us;

The builder’s risk policy did not cover damage to the crane because the crane was equipment which will NOT become a permanent part of the structure. The Eleventh Circuit agreed:

In addition to insuring the structure itself, these policies also typically include building materials, machinery, and equipment on the premises that are awaiting installation. This kind of machinery and equipment is clearly different from a contractor’s machinery and equipment that is used in the construction process, such as the damaged crane. The type of machinery and equipment intended to fall under the definition of “covered property” in a builder’s risk policy is that which will become a permanent part of the structure—this includes materials such as elevators, doors, windows, electrical equipment, and water pumps. However, since these materials are generally delivered to the site before they are required in order to avoid delays in construction, ownership of the property may not yet belong to the owner of the building. It is these materials that the DIC [builder’s risk] policy is referring to when it provides coverage for “property of others.” Although Kelley’s [supplier’s] damaged crane technically falls within the category “property of others,” it is not the type of property to become a part of the building and covered under a builder’s risk policy; consequently, it is expressly excluded in the DIC policy by the provision requiring covered property to be that which will become a permanent part of the structure.

Ajax Bldg., 358 F.3d at 799-800 (internal citations omitted).

Cranes are expensive so it is important to insure potential damage to cranes (and any equipment used for purposes of construction). Noteworthy insurance considerations to consult with your insurance broker about include, but are not limited to:

Contractor’s equipment insurance– you want to confirm any sublimit for any leased equipment, whether it is based on replacement cost or actual cash value, and whether you need to report such leased equipment to your insurer per the policy in advance of using the equipment
Equipment liability coverage– you want to ensure your liability policy insures equipment you rent or you have an endorsement that provides coverage for equipment rented or leased from others
Builder’s Risk – the exclusion in the builder’s risk policy discussed above for equipment that will not become a permanent part of the structure is a common exclusion, so you want other insurance to cover this risk and/or confirm whether there is an endorsement modifying that exclusion

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

PROPERTY INSURANCE EXCLUSION: LEAKAGE OF WATER OVER 14 DAYS OR MORE

Posted on June 29, 2018April 27, 2020 by Edward Garber

The recent opinion of Whitley v. American Integrity Ins. Co. of Florida, 43 Fla.L.Weekly D1503a (Fla. 5^th DCA 2018), as a follow-up to this article on the property insurance exclusion regarding the “constant or repeated seepage or leakage of water…over a period of 14 or more days,” is a beneficial opinion to insureds.

In this case, the insured had a vacation home. A plumbing leak occurred that caused water damage to the home. The plumbing leak occurred during a period of time that lasted approximately 30 days. For this reason, the property insurer denied the claim per the exclusion that the policy does not cover loss caused by repeated leakage of water over a period of 14 or more days from a plumbing system. Summary judgment was granted by the trial court in favor of the insurer based on this exclusion.

The insured countered that the policy did not address whether it covered a loss occurring within the first 14 days. The insured argued, and the appellate court agreed, that the insurer therefore failed to establish that the water loss did not occur within the first 14 days. “The undisputed fact that the property was exposed to water for more than fourteen days did not establish that the loss occurred on the fourteenth or later day of exposure pursuant to the exclusionary provision.” Whitley, supra.

This is a beneficial case to an insured because if loss occurred due to the continued seepage or leakage of water over a period of 14 days or more (e.g., continuous plumbing leak), the insured can establish it is still entitled to coverage for loss that occurs during the first 14 days. This puts the onus on the insurer to argue the loss occurred after the 14th day. However, the insured will counter that the loss occurred during the first 14 days. In other words, the insured can make this a question of fact for the jury.

WORKERS COMPENSATION IMMUNITY AND THE INTENTIONAL TORT EXCEPTION

Posted on June 16, 2018April 27, 2020 by Edward Garber

In prior articles, I discussed the benefit of workers compensation immunity for contractors. Arguing around workers compensation immunity under the “intentional tort exception” is really hard – borderline impossible, in my opinion. Nevertheless, injured workers still make an attempt to sue a contractor under the intentional tort exception to workers compensation immunity. Most fail based on the seemingly impossible standard the injured worker must prove to establish the intentional tort exception. A less onerous standard (although certainly onerous), as a recent case suggests, appears to be an injured worker suing a co-employee for the injury.

Florida Statute s. 440.11 discusses the intentional tort exception to workers compensation immunity. Workers compensation shall be the exclusive remedy to an injured worker UNLESS the injured worker can establish a claim against the contractor or fellow-employee under the intentional tort exception as statutorily set forth below:

440.11 Exclusiveness of liability. —

(1) The liability of an employer prescribed in s. 440.10 shall be exclusive and in place of all other liability . . . except as follows:

. . . .

(b) When an employer commits an intentional tort that causes the injury or death of the employee. For purposes of this paragraph, an employer’s actions shall be deemed to constitute an intentional tort and not an accident only when the employee proves, by clear and convincing evidence, that:

1. The employer deliberately intended to injure the employee; or

2. The employer engaged in conduct that the employer knew, based on prior similar accidents or on explicit warnings specifically identifying a known danger, was virtually certain to result in injury or death to the employee, and the employee was not aware of the risk because the danger was not apparent and the employer deliberately concealed or misrepresented the danger so as to prevent the employee from exercising informed judgment about whether to perform the work.

The same immunities from liability enjoyed by an employer shall extend as well to each employee of the employer when the employee is acting in furtherance of the employer’s business and the injured employee is entitled to receive benefits under this statute. Such fellow-employee immunities shall not be applicable to an employee who acts, with respect to a fellow employee, with willful and wanton disregard or . . . with gross negligence when such acts result in injury or death or such acts proximately cause such injury or death . . . .

In Ramsey v. Dewitt Excavating, Inc., 43 Fla. L. Weekly D1366a (Fla. 5^th DCA 2018), an employee was cleaning a cement-mixing pugmill with a fellow employee. An accident happened while the employee was inside the mixing box causing his death. While he was inside, his fellow-employee turned on the mixing box causing his death. The employee’s estate sued both the employer and the fellow-employee for the wrongful death and argued under the intentional tort exception to get around workers compensation immunity.

The trial court granted summary judgment on the issue of workers compensation immunity finding that the immunity barred the estate’s claims against the employer and the fellow-employee.

Intentional Tort Exception as to Employer

The appellate court affirmed the summary judgment as to the employer because the employee could NOT prove the virtually impossible burden in establishing the applicability of the intentional tort exception.

Three elements must be proved to establish the intentional tort exception to worker’s compensation immunity, and the failure to prove any one of the elements will prevent the exception from applying. The elements are:

1) employer knowledge of a known danger . . . based upon prior similar accidents or explicit warnings specifically identifying the danger that was virtually certain to cause injury or death to the employee;

2) the employee was not aware of the danger . . . because it was not apparent; and

3) deliberate concealment or misrepresentation by the employer . . . preventing employee from exercising informed judgment as to whether to perform the work.

Ramsey, supra (internal citation omitted).

There was no evidence to suggest that the employee was not aware of the danger involved in cleaning the inside of the cement mixing box and that he had to be aware based on working on the machine in the past, which was inherently dangerous in of itself. This alone supported the application of the workers compensation immunity and there likely would have been a lot more facts (or facts the employee’s estate would not be able to prove) supporting the immunity.

Intentional Tort Exception as to Fellow-Employee

The appellate court, however, reversed the summary judgment as to the fellow-employee finding that a jury could find that the fellow-employee acted with gross negligence causing the death of the employee.

In order to establish that Gubbins [fellow-employee] acted with gross negligence when he turned on the pug mill while Ramsey [employee] was still inside, the parents [representatives of estate] were required to present evidence as to each of the following three elements:

1) circumstances constituting an imminent or clear and present danger amounting to a more than normal or usual peril [;]

2) knowledge or awareness of the imminent danger on the part of . . . [Gubbins;] and

3) an act or omission [on the part of Gubbins] that evinces a conscious disregard of the consequences.

Ramsey, supra.

The estate had evidence that the fellow-employee directed the decedent-employee inside the cement mixing box and then activated the box without utilizing any safety system or checking to see if the decedent-employee was still inside. Based on this evidence, a jury could conclude that the fellow-employee was grossly negligent in activating the mixing box.

COMPETING EXPERT WITNESSES IN AN INSURANCE COVERAGE DISPUTE

Posted on April 2, 2018April 2, 2018 by Edward Garber

Oftentimes, insurance coverage disputes involve competing expert witnesses. The experts render different expert opinions regarding a topic that goes to coverage and/or damages. An example of competing expert witnesses can be found in the recent property insurance coverage dispute, Garcia v. First Community Ins. Co., 43 Fla.L.Weekly D671a (Fla. 3d DCA 2018).

In this case, an insured submitted a claim under her homeowner’s policy for water damage due to a roof leak. She claimed her damage was approximately $23,000. The insurer denied coverage and an insurance coverage dispute ensued.

The insured’s policy, akin to many homeowner’s policies, contained exclusions for loss caused by:

h. Rain, snow, sleet, sand or dust to the interior of a building unless a covered peril first damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening.

***

i. (1) Wear and tear, marring, deterioration;

The insurer sent an engineer to inspect the insured’s property and the engineer (expert) opined that the water intrusion was not covered under the policy based on the aforementioned exclusions. Her opinion was that the water intrusion through the roof was the result of deterioration from age, tree branch abrasions, and construction defects based on how nails were installed into the shingles. Based on this opinion, the insurer was denying coverage based on the (i) wear and tear, marring and deterioration exclusion and (ii) rain intruded through the roof based on a peril (construction defect) that was not covered under the policy.

The insured, as expected, had a competing expert that opined that a hail impact or high wind uplift (covered peril) in the days leading up to the rain event caused water to intrude through the roof and cause interior damage. Under this opinion, the insured was presenting an expert opinion for coverage and why the insurer’s exclusions were inapplicable.

In this case, surprisingly, the trial court granted summary judgment in favor of the insurer. However, this was reversed on appeal because the competing opinions as to coverage and the cause of the insured’s loss created a genuine issue of material fact. Summary judgment cannot be granted if there are genuine issues of material fact. See Garcia, supra, (“Given this conflict in the material evidence as to the cause of the loss, the trial court erred in entering final judgment in favor of First Community [insurer].”).

Another argument the insurer raised was that its engineer inspected the property within months after the date of loss whereas the insured’s expert is basing an opinion on an inspection that occurred three years after the fact. This fact, albeit true, does not create a genuine issue of material fact. Rather, it goes to the credibility of the experts at trial. Which expert is more credible regarding the cause of the loss: the insurer’s expert that inspected the property a few months after the loss or the insured’s expert that inspected the property years after the loss. Well, the issue of credibility and how a jury / trier of fact weighs this in consideration of other evidence is not appropriate in determining a motion for summary judgment. See Garcia, supra.

Experts are an important part of construction disputes including insurance coverage disputes and it is not uncommon for there to be competing expert opinions as to the cause of a loss, a defect, and, of course, damages.

PROPERTY INSURANCE EXCLUSION FOR CONSTANT OR REPEATED LEAKAGE OF WATER

Posted on March 1, 2018April 27, 2020 by Edward Garber

A property insurance policy, no different than any insurance policy, contains exclusions for events that are NOT covered under the terms of the policy. One such common exclusion in a property insurance policy is an exclusion for damages caused by “constant or repeated seepage or leakage of water…over a period of 14 or more days.”

The application of this exclusion was discussed in the recent opinion of Hicks v. American Integrity Ins. Co. of Florida, 43 Fla. L. Weekly D446a (Fla. 5^th DCA 2018). In this case, while the insured was out of town, the water line to his refrigerator started to leak. When the insured return home over a month later, the supply line was discharging almost a thousand gallons of water per day. The insured submitted a property insurance claim. The property insurer engaged a consultant that opined (likely, correctly) that the water line had been leaking for at least five weeks. Based on the above-mentioned exclusion, i.e., that water had been constantly leaking for over a period of 14 days, the insurer denied coverage. This denial led to the inevitable coverage dispute.

The trial court granted summary judgment in favor of the insurer in the insurance coverage lawsuit. The insured argued at trial and then on appeal that this exclusion only applies to losses caused by water on day 14 and after. For this reason, the insured attempted to calculate his water damage losses that occurred during the first 13 days of the supply line leaking. The appellate court agreed with the insured:

In light of the general principle that insurance policy provisions susceptible to more than one interpretation should be construed liberally in favor of the insured and strictly against an insurer, and that exclusionary clauses should be read even more narrowly, we hold that an insurance policy excluding losses caused by constant or repeated leakage or seepage over a period of fourteen days or more does not unambiguously exclude losses caused by leakage or seepage over a period of thirteen days or less. It is not unambiguously clear that a provision excluding losses caused by constant leakage of water over a period of fourteen or more days likewise excludes losses caused by constant leakage of water over a period of less than fourteen days. And ambiguous insurance provisions — those susceptible to more than one meaning, one providing coverage and the other denying it — must be construed against the insurer and in favor of coverage.

Hicks, supra (internal citations omitted).

This is a favorable ruling for an insured as it established coverage within the first 13 days of the water supply line leaking. The damages associated with that loss is a material issue of fact to be determined by the jury (or judge if it is a bench trial). But, importantly, the ruling established coverage under this exclusion, meaning the insurer could not categorically bar coverage because the leak constantly occurred for 14 or more days; rather, the insured’s damages, if any, would be limited to the first 13 days of the leak.

CONTRACTORS: CONSULT YOUR INSURANCE BROKER REGARDING YOUR CGL POLICY

Posted on February 10, 2018February 10, 2018 by Edward Garber

Contractors: do yourself a favor and consult your insurance broker regarding your commercial general liability (CGL) policy. Do this now, especially if you subcontract out work.

CGL policies contain a “your work” exclusion. The CGL policy is written such that it excludes “‘property damage’ to ‘your work’ arising out of it or any part of it and included in the ‘products-completed operations hazard.’” This exclusion will be raised in the post-completion latent construction defect scenario. (There are other exclusions that will be raised to a defect discovered during construction.) Certain policies will contain a subcontractor exception to this “your work” exclusion. You WANT this exception- no doubt about it so that this exclusion does not apply to work performed by your subcontractors. Without this subcontractor exception, truth be told, this “your work” exclusion is a total back-breaker to contractors. It will give your insurer an immediate out for many latent defect property scenarios since excluded from coverage is property damage to your work including work performed by your subcontractors.

In a recent opinion, Mid-Continent Casualty Co. v. JWN Construction, Inc., 2018 WL 783102 (S.D.Fla. 2018), an owner discovered water intrusion and damage at his property. He sued the general contractor and the general contractor’s insurer filed a separate action for declaratory relief claiming it had NO duty to defend or indemnify its insured—the general contractor—in the underlying suit. The court agreed because the contractor did not have the subcontractor exception to the “your work” exclusion.

If work was performed by JWN [contractor] or on JWN’s behalf-here by a subcontractor-then the “your work” exclusion applies. Historically, insurers could be liable under commercial general liabilities policies resembling the policy in the instant case for certain types of damages caused by subcontractors….Nonetheless, insurers do possess the right to define their coverage as excluding damages arising out of a subcontractor’s defective work by eliminating subcontractor’s exceptions from the policy. An insurer is only liable for a subcontractor’s defective work when the “your work” exclusion does not eliminate coverage for work performed by a subcontractor….In conclusion, the insurance policy in this case excluded coverage for work performed not only by JWN, but also by JWN’s subcontractors.

JWN Construction, Inc., supra, at *4.

This ruling meant that the general contractor’s CGL insurer had no duty to defend or indemnify its insured—again, the contractor—for the defects or resulting water damage. A total killer illustrating the absolute importance of the subcontractor exception to the “your work” exclusion in your CGL policy.

BURDEN OF PROOF UNDER ALL-RISK PROPERTY INSURANCE POLICY

Posted on January 22, 2018January 22, 2018 by Edward Garber

A recent Florida case, Jones v. Federated National Ins. Co., 43 Fla. L. Weekly D164a (Fla. 4^th DCA 2018) discusses the burden of proof of an insured in establishing coverage under an all-risk property insurance policy. Getting right to this critical point, the court explained the burden of proof as follows:

1. The insured has the initial burden of proof to establish that the damage at issue occurred during a period in which the damaged property had insurance coverage. If the insured fails to meet this burden, judgment shall be entered in favor of the insurer.

—

2. If the insured’s initial burden is met, the burden of proof shifts to the insurer to establish that (a) there was a sole cause of the loss, or (b) in cases where there was more than one cause, there was an “efficient proximate cause” of the loss.

—

3. If the insurer meets the burden of proof under either 2.(a) or 2.(b), it must then establish that this sole or efficient proximate cause was excluded from coverage by the terms of the insurance policy. If the insurer does so, then judgment shall be entered in its favor. If the insurer establishes that there was a sole or efficient proximate cause, but fails to prove that this cause was excluded by the all-risk insurance policy, then judgment shall be entered in favor of the insured.

—

4. If the insurer fails to establish either a sole or efficient proximate cause, and there are no applicable anti-concurrent cause provisions, then the concurrent cause doctrine must be utilized. Applying the concurrent cause doctrine, the insurer has the initial burden of production to present evidence that an excluded risk was a contributing cause of the damage. If it fails to satisfy this burden of production, judgment shall be entered in favor of the insured.

—

5. If the insurer does produce evidence that an excluded risk was a concurrent cause of the loss, then the burden of production shifts to the insured to present evidence that an allegedly covered risk was a concurrent cause of the loss at issue. If the insured fails to satisfy this burden of production, judgment shall be entered in favor of the insurer.

—

6. If the insured produces evidence of a covered concurrent cause, the insurer bears the burden of proof to establish that the insured’s purported concurrent cause was either (a) not a concurrent cause (i.e., it had no (or a de minimis) causal role in the loss), or (b) excluded from coverage by the insurance policy. If the insurer fails to satisfy this burden of proof, judgment shall be entered in favor of the insured.

Jones, supra.

In this case, the insured suffered roof damage and claimed it was the result of a hailstorm, a peril covered under the policy. The property insurer denied coverage contending the roof damage was not covered under the policy due to certain exclusions including, without limitation: (i) wear and tear, (ii) faulty or defective design, and (iii) existing damage. The homeowner argued that the concurrent cause doctrine should apply to determine if there was coverage under this all-risk property insurance policy. (Check out this article for more on the concurrent cause doctrine.) This doctrine holds that insurance coverage may exist if an excluded peril and covered peril concurrently cause a loss. The trial court did not apply this doctrine; rather, it applied the doctrine known as the efficient proximate cause doctrine which holds that if there are concurrent causes for a loss, the peril that set the other peril in motion is the peril that the loss is attributable to, i.e., you are looking at the most responsible cause of the loss. Thus, if an excluded peril set a covered peril in motion, i.e., it is the most responsible cause of the loss, the loss would be attributable to the excluded peril and not covered by the policy.

The court, relying on a Florida Supreme Court decision, maintained that it was error to instruct the jury on the efficient proximate cause doctrine without the jury first determining whether an efficient proximate cause of the loss could be determined. If it could not be determined, the concurrent cause doctrine would apply and the jury would determine if one of the concurrent causes (perils) was covered under the policy. For instance, if the jury could not determine whether one peril set another peril in motion, the jury would determine whether the hailstorm concurrently caused the roof damage with another peril (e.g., defective design); and, if so, whether the hailstorm is a covered peril such that the roof damage would be covered under the policy.

Notably, the court noted that certain exclusions the insurer relied on contain anti-concurrent cause language, which negates the application of the concurrent cause doctrine. However, since some of the exclusions the insurer relied on did not specifically incorporate anti-concurrent cause language, the jury could have found that the hailstorm concurrently caused the roof damage with an exclusion that did not contain the anti-concurrent cause language meaning the concurrent cause doctrine would apply.

I know this is confusing. I agree, it very well can be confusing. Nonetheless, what this emphasizes is the importance of strategy when it comes to presenting a property insurance claim to trigger the application of the concurrent cause doctrine and preparing jury instructions, which is the law you want the jury to follow. This also emphasizes the importance of the verdict form which is the form the jury fills out to decide the outcome of the case.

HIRING SUBCONTRACTORS WITH WORKERS COMPENSATION INSURANCE

Posted on December 30, 2017December 30, 2017 by Edward Garber

You want to hear more on the POWER of statutory workers compensation immunity? Well, here it is, because as I have mentioned in the past, workers compensation immunity is powerful reinforcing the importance for contractors to ensure the subcontractors they hire absolutely have workers compensation insurance. Likewise, subcontractors want to ensure the subcontractors they hire also have workers compensation insurance.

In the case of Fisk Construction, Inc., v. Obando, 42 Fla. L. Weekly D2501b (Fla. 3d DCA 2017), a general contractor hired a roofer. The roofer subcontracted a portion of its work to a sub-subcontractor. A foreman of the sub-subcontractor than orally hired a laborer to perform a portion of the work the sub-subcontractor was responsible for performing. The laborer got hurt and a lawsuit was filed. The trial court ruled that the sub-subcontractor could not rely on workers compensation immunity as an affirmative defense finding that the sub-subcontractor waived and/or was estopped from asserting this defense. There appeared to be an initial denial of workers compensation benefits that was later remedied by the sub-subcontractor’s workers compensation insurer agreeing to pay the laborer’s hospital bills and medical visits. (Since the laborer was hired in an oral, handshake-type of deal, it could have been that executives of the sub-subcontractor had to investigate the laborer’s involvement at the project since he was not an employee of the company.)

On appeal, the Third District reversed holding that the sub-subcontractor could rely on workers compensation immunity as an affirmative defense. “[A]n initial denial of liability or [workers compensation] benefits does not automatically estop an employer from asserting workers’ compensation immunity [as an affirmative defense].” Fisk Construction, supra.

BAD FAITH IN THE CONTEXT OF PROPERTY INSURANCE CLAIMS (WEBINAR)

Posted on December 16, 2017December 16, 2017 by Edward Garber

Recently, I participated in a national webinar involving insurance bad faith in the property insurance context. My section of the webinar dealt with the elements and burden of proof in demonstrating bad faith by an insurer in various jurisdictions. If you are dealing with a property insurance claim, or believe there may have been bad faith by the insurer, make sure you are working with counsel equipped to handle the jurisdictional nuances in advising you of your rights and proving such a claim.

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POWER OF WORKERS COMPENSATION IMMUNITY ON CONSTRUCTION PROJECT

Posted on November 17, 2017November 17, 2017 by Edward Garber

On construction projects, workers compensation immunity is real and it is powerful. (See also this article.) Workers compensation immunity is why all general contractors should have workers compensation insurance and they should ensure the subcontractors they hire have workers compensation insurance. Workers compensation insurance becomes the exclusive form of liability for an injured worker thereby immunizing an employer (absent an intentional tort, which is very hard to prove as a means to circumvent workers compensation immunity).

If a general contractor, with workers compensation insurance, hires a subcontractor without workers compensation insurance, the general contractor’s workers compensation insurance will be responsible in the event an injury occurs to a subcontractor’s employee. The general contractor becomes the statutory employer.

If a general contractor, with or without workers compensation insurance, hires a subcontractor with workers compensation insurance, the subcontractor’s workers compensation insurance will be responsible in the event of an injury to that subcontractor’s employee (including any sub-subcontractor’s employees). This is a main reason why the general contractor wants to ensure the subcontractors it hires has workers compensation insurance.

An example of the benefit of workers compensation immunity can be found in the recent case of Gladden v. Fisher Thomas, Inc., 42 Fla. L. Weekly D2441a (Fla. 1^st DCA 2017), dealing with a statutorily exempt corporate officer of a sub-subcontractor. In this case, a general contractor hired two applicable subcontractors. One of the subcontractors was a flooring subcontractor that subcontracted out a portion of its flooring work to an entity whose owner was statutorily exempt from workers compensation insurance. This owner claimed he was injured through the actions of the other subcontractor and filed a lawsuit against the general contractor and the other subcontractor for negligence. He claimed that workers compensation immunity should not apply because he was statutorily exempt from workers compensation. Both the trial court and appellate court did not buy the owner’s argument. The owner’s exemption from workers compensation insurance does not equate to an exemption from workers compensation immunity. He is still bound by workers compensation immunity even if he is statutorily exempt. His only recourse is confined to a claim against his company that did not procure workers compensation coverage. That’s it. “Since the corporate employer reaps the benefit of reduced workers’ compensation premiums for the exempt officer, it makes sense that there is a risk associated with the benefit.” Gladden, supra.