Many insurance policies include the following standard provision: “This insurance does not apply to bodily injury, property damage, personal injury, advertising injury, or medical payments for operations performed for you by independent contractors or your acts or omissions in connection with your general supervision of such operations” (exclusion).
Relying on this exclusion, your insurer may deny coverage for injuries sustained by subcontractors and decline to defend you in the underlying litigation or personal injury suit.
A Massachusetts court recently ruled in favor of insurer Lloyd’s in a dispute over a general liability policy excluding coverage for independent contractors. The case is No. 11-P-1852, CABLE MILLS, LLC., vs.COAKLEY PIERPAN DOLAN AND COLLINS INSURANCE AGENCY, INC.; Certain Underwriters at Lloyd’s, London, third-party defendants, Appeals Court of Massachusetts, Middlesex, September 11, 2012.
Paperless Advice:
1. Reduce Liability When Selecting Subcontractors
2. Always use a contract with subcontractor and require them to carry General Liability and Workers Comp. insurance. Pay extra attention on whether the owners of subcontracting company are included in the Workman’s comp. coverage and reflect this requirement in the contract.
3. Have legal council to review your contract and advise on all potential gaps in your liability.