Do Commercial General Liability Policies Cover Injuries to Employees? Sam’s Auto Wrecking and Lombard General Insurance
The Ontario Superior Court of Justice recently released reasons in Sam’s Auto Wrecking and Lombard General Insurance The case is interesting because it involves the relationship between worker’s compensation coverage, employee disability insurance policies and commercial general liability policies.
John Ferber was employed by Sam’s Auto Wrecking Co. Limited. While helping other employees of Sam’s Auto Wrecking load a flatbed truck Ferber was seriously injured.
Unfortunately for Mr. Ferber, the owners of the business, Ken and Lorne Rochwerg had opted out of the provincially run Worker’s Compensation Insurance program. The owners had obtained disability insurance through a private insurer. But the disability policy didn't cover claims for personal injury, only temporary disability.
The Company's commercial general liability policy limited the liability of Sam’s Auto Wrecking for any claim brought by an employee for an injury incurred in the course of their employment.
Motion for Directions
The employer and the commercial liability insurer sought direction from the court as to whether or not the CGL policy covered Mr. Ferber’s injuries.
The court stated, at paragraph 12:
The central issue is whether or not the personal injury experienced by Mr. Ferber, indirectly at the hands of an employee at Sam’s operating within the scope of his employment, was or should have been covered by the commercial general liability policy which was part of the comprehensive business policy provided by Lombard.
The court indicated that there was a gap in coverage in the companies various insurance policies. At paragraph 65:
...in the section that describes “who is an insured”, there is no ambiguity. It cannot be said that it flies in the face of what is commercially reasonable. There is a WSIB scheme that provides disability insurance to its participants. The management team has its own private disability insurance. Yes there is a lacuna with respect to coverage for personal injury beyond disability insurance, but that was neither requested nor contemplated by the Rochwergs. That gap was equally not contemplated by Mr. McCarter, the broker. He did not request an employer’s liability endorsement.
The court concluded:
There was not coverage for the personal injury to Mr. Ferber either as an employee or an executive officer. The distinction between the two terms is academic. If it were not, the court would be inclined to say that Mr. Ferber was within the classic definition of an “employee”. He was not an independent contractor.
Why is it Important?
I am contacted by people who have been injured, in a variety of ways, on a regular basis. Often they assume because they have “insurance” either through work or otherwise that they are entitled to receive compensation for their injuries.
The Sam’s Auto Wrecking case points out that in some cases there may be a gap in the insurance coverage that can leave innocent accident victims with no recourse to insurance benefits.
Employees who think they are covered by group disability policies or private disability insurance should take the time to carefully read the terms of their policies and the exclusions contained in those policies. It may be that you are not as protected as you think.