Here’s how to explain to a client when a fellow employee endorsement would be triggered.
Q: A producer is trying to explain to an insured why they should purchase a fellow employee coverage endorsement as part of their commercial general liability coverage. The endorsement is $1,800. The insured wants several written scenarios as to when this coverage would come into play. When would a fellow employee endorsement be triggered?
Response 1: First, the insured needs to understand what a "fellow employee" and "insured" is.
Under an unendorsed CGL policy, the insured's employees are insureds—as long as they are acting within their course and scope of work. Therefore, all of the employees are insureds, just like the owner of the company.
The purpose of the fellow employee exclusion in the CGL policy is to distinguish between what may be covered under workers comp and what could be covered under the CGL. What it boils down to is: one employee, who was not in the course and scope of their work at the time of an accident, injured another employee, who was in the course and scope of their employment at the time of the accident.
Response 2: In many states, the exclusive remedy that is afforded by employers also applies to fellow employees. In Alabama, employers are afforded the protections of the Exclusivity Doctrine for injured workers where workers compensation insurance benefits are provided.
While this doctrine serves to insulate employers in Alabama from liability claims, Alabama Code § 25-5-11 provides a means for recovery against supervisors, safety personnel, and other fellow employees. To prevail, the employee must prove by clear and convincing evidence that the injuries resulted from a co-employee's “willful conduct."
§ 25-5-11(c)(1) requires a finding that the co-employee acted in a manner where they knew or should have known that someone would be injured. § 25-5-11(c)(2) requires a finding that the co-employee committed an overt act, such as removing a safety device that exposed the plaintiff to injury.
Here are four situations that exemplify willful conduct:
- The employee intended to cause injury.
- The employee intentionally removed a safety device.
- The employee was intoxicated.
- The employee intentionally violated or disregarded a written safety rule, after they had previously been notified of the safety violation.
I think that once you know the potential exposure, you can come up with a number of examples that pertain to your particular insured. There is a reason the insurer wants $1,800 for the endorsement—just think of the costs of defending a claim against an employee.
Response 3: It's a good idea to have a subscription to Rough Notes Advantage that breaks down the forms and endorsements. Examples might be when one employee sets a machine incorrectly, resulting in a fellow employee cutting a finger off. Or an employee sets up the staging wrong and a fellow employee falls off. Or an employee is driving and texting and injures another employee.
Response 4: An employee was in a cherry picker bucket. The safety harness that came with the bucket had been removed because it restricted movement. It had been replaced by a less restrictive harness. The employee had been instructed by his supervisor to use the bucket to apply pressure to a tree while another employee cut it down. The tree fell against the bucket, causing the bucket to overturn and throw the employee to the ground, allegedly due to the failure of the safety harness.
The injured worker filed a workers comp claim and then sued the supervisor. The carrier declined to provide a defense for the supervisor because he did not qualify as an “insured" for injury to a fellow employee. The producer had recommended an endorsement to revise the definition of insured to include managers and supervisors, but the named insured declined the coverage. The named insured was aware of the replacement of the harness.
This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.
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