Imagine you are a prime contractor to a Department of the United States of America supplying logistical support for the war on terrorism in Afghanistan. As the prime, you are kicking on all cylinders, including purchasing comprehensive Employer’s Liability, Workers’ Compensation and Defense Base Act (DBA) insurance to cover your own employees against a worker injury claim abroad.
Then the phone rings.
A 30-year-old American worker hired by your subcontractor working on base encountered a swarm of bees while painting; he fell and was crippled. The sub isn’t paying his medical expenses and is apparently nowhere to be found. The injured employee’s bulldog lawyer is on the line threatening to sue your company directly for his client’s devastating injuries.
How can this be?
DBA coverage is workers’ compensation insurance that employers may turn to in the event that an employee is injured while working on a contract financed by the U.S. Government and performed outside the United States. Section 5(a) of the Act provides that “a contractor shall be deemed the employer of a subcontractor’s employees if the subcontractor fails to secure the payment of compensation.”
market, the vast majority of corporate policyholders do not know what the policy covers or whether it’s worth purchasing in the first place. Even corporations that have Side A DIC coverage are often mystified by how the policy works in conjunction with their standard form D&O policies, and are unaware of how to trigger that coverage when a claim arises. This post seeks to bring Side A DIC coverage—which often sits shrouded in darkness at the top of a D&O tower—into the light, and provides a primer on the significant safety net the policy provides for officers and directors.
Last week, I had the great fortune of going to Cancun with my family. Sun, white sand beaches, amazing Mayan ruins (and traditions) intact. I’m sure you know what it’s like—kids buried in sand, beaming smiles, you relaxing in the sun (perhaps a touch of pink on the shoulders and nose), and an umbrella drink (or two).
a covered “occurrence” because the damage was purportedly not unintended or unexpected. In recent years, however, courts have shifted course; the majority of courts have found that property damage arising out of faulty workmanship constitutes an “occurrence” under standard-form CGL policies. Additionally, some states enacted legislation requiring CGL policies to define occurrence to include property damage or bodily injury resulting from faulty workmanship, or have made it easier for insureds to obtain coverage for damages as a result of work the insureds performed.
coverage, which covers certain cost increases resulting from project delay (think higher finance costs). Typically, though, when a construction project experiences an unanticipated delay, everyone—the owner, the builder, the subcontractors and suppliers—is interested in getting the project back on schedule. So owners sometime also get “Expense to Reduce the Amount of Loss” (ERAL) coverage, which covers the cost of accelerating the project to get it back on schedule (think higher costs for additional construction crews and overtime). But if you have both “Soft Cost” and ERAL coverage, do they cancel each other out?