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Review your liability coverage for employee injuries

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in Human Resources

Heads up: The New Jersey Supreme Court just decided an employer insurance case that may mean insurance carriers will change the way they write errors-and-omissions policies.

The decision makes it more likely that insurers will have to pay damages if employees are injured due to employers’ safety violations. So, insurers may soon rewrite their policies to make it clear they don’t cover such cases, or they’ll raise premiums to cover the risk.

Check with your insurance carrier or broker to make sure you have the right coverage.

Recent case: Alexis Attune, an employee of Delta Plastics, was hurt while working on a piece of film-winding equipment. Although he received workers’ comp benefits, he sued Delta for allegedly altering the equipment and making it unsafe to use.

The insurance carrier refused to defend the employer, arguing that Delta’s insurance contract excluded coverage for “bodily injury intentionally caused” by the company.

But the Supreme Court said the exclusion didn’t apply to an unintentional injury (an employee hurt by equipment) caused by an intentional wrong (altering the equipment). It said the insurer had to defend the case and pay any eventual jury award. (New Jersey Manufacturers Insurance Company v. Delta Plastics, et al., No. A-87 September 2005, Supreme Court of New Jersey, 2006)   

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