Insure for workers’ comp? Your liability policy may cover gross negligence, too — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Insure for workers’ comp? Your liability policy may cover gross negligence, too

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The Texas Supreme Court recently decided that employers that have workers’ compensation insurance and are sued for gross negligence could also insure for any damages a court may award for that negligence.

If you don’t know whether your employers’ liability policy covers additional damages, now is a good time to check the policy and discuss it with your insurance broker.

Recent case: When Roy Bennet died at work, his employer’s workers’ comp insurance covered lost wages. His wife also sued the company for gross negligence, which Texas law allows. She alleged the company had failed to provide a safe workplace.

The company’s liability insurer argued that the policy didn’t cover gross negligence—and that even if it did, Texas law prohibits insuring away one’s responsibility.

The Texas Supreme Court disagreed in this case. It said that—at least in workers’ compensation cases—employers and insurers could agree to cover gross negligence. (Fairfield Insurance v. Stephens Martin Paving, et al., No. 04-0728, Supreme Court of Texas, 2008)

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