Screeeeeeeech! The 2015 F-150 driven by your top foreman, Charles, slams into the back of a completely stopped garbage truck. The passenger with Charles, one of your new associates, Pete, slams into the dashboard, disrupting a monumental run in Candy Crush, and, more importantly, crushing his forehead. Charles is relatively unharmed, only experiencing a few bruises. It turns out he was putting directions into his phone and failed to see the stopped truck ahead of him.This isn’t a story about a business owner not having the insurance coverage needed to protect his assets in the event of an accident. No, this is a story of an unsuspecting, valued employee losing his entire life’s savings because that business owner’s agent did not close a gaping hole in his commercial auto policy.
Here’s how the story develops. Pete, the passenger, gets treated at the hospital, misses a few weeks, and collects benefits under the Workers’ Compensation system. His employer obviously covers those expenses and avoids any legal challenges from Pete due to workers’ compensation being a sole remedy. The employer is also covered in the event the Garbage Truck is damaged or its driver experiences injuries. All good, right? Wrong. You see, Pete isn’t satisfied. In fact, he is upset at Charles. First, he didn’t really care for the way Charles always asked him to show up on time (the nerve). Second, he claims an on-going aversion to driving in trucks now, thereby hindering his career. So, he sues Charles personally.
Charles is annoyed, but turns the notice of suit over to the business owner to file against the business’s auto policy. The owner gets a call from his agent that goes a little like this: “Hey buddy, how’s it going? Didn’t see you at the club last Saturday. Listen, about that lawsuit. You’re fine, no worries about the company. Charlie? Well, you know these insurance companies, they just don’t cover these type of personal suits. He’s on his own”.
Imagine Charlie’s surprise when he realizes his own assets will be paying to defend him and potentially pay a settlement or judgment to Pete. You see, his employer’s agent failed to endorse CA 20 55, the “Fellow Employee” endorsement on to the company’s auto policy. That oversight saved the employer a whopping $0 (not a miss-print, that endorsement can be added for free) but will cost a valuable employee dearly. Oh, I should say former employee…I doubt Chuck will stick around after being left out to dry. Perhaps he has personal insurance to cover the lawsuit. Maybe his personal umbrella has the “Duty to Defend” and carries sufficient limits. Perhaps his personal auto policy has extended, non-owned liability endorsement. My guess is that Charlie feels his employer should provide the coverage and it is likely Charlie’s personal insurance program is not equipped to respond adequately.
Coverage for “fellow employees” is excluded from most standard commercial auto policies. It excludes coverage for “bodily injury to any fellow employee of the insured arising out of and in the course of the fellow employee’s employment or while performing duties related to conduct of your business”. Loosely translated, this says that an employee is not covered if they injure another employee on the job while using an auto. Cue the Sad Trombone…or, should I say, “sorry, Charlie”.
by Todd Piersol