Case Analysis: Everett Cash Mutual Ins. Co. v. Taylor, 926 N.E.2d 1008 (Ind. 2010).
Facts of Case: The Taylors are farmers who employed an independent contractor to paint a house, grain bin, and barn on their premises. An employee of the independent contractor sustained injuries when he was shocked by an electrical wire and fell from a ladder. The employee filed a workers compensation claim against his employer, but he ultimately learned that his employer did not possess workers compensation insurance. He thus sought payment from the Taylors pursuant to I.C. § 22-3-2-14(b), which imposes liability on a person who hires a contractor without verifying that the contractor carries workers compensation insurance. The Taylors had failed to verify this information from the independent contractor.
Prior to this incident, the Taylors had purchased a farm personal liability policy from Everett Cash Mutual Insurance Company, and had specifically asked their insurance agent to secure “all risk" coverage. They wanted their coverage to include any invitees, contractors, or employees who would come upon the farm. When they first contacted their agent after the incident with the employee, the agent stated that there would be coverage for the claim, but Everett Cash ultimately denied coverage. Thus, the Taylors filed suit against Everett Cash and their insurance agent on the theories of breach of contract and estoppels. The trial court denied Everett Cash’s motion for summary judgment, but the Court of Appeals reversed. The Indiana Supreme Court then granted transfer of the case.
Issue: Did the claim arise from an “accident" or “occurrence" as those terms are defined under the Everett Cash policy?
Holding: Yes. The Court notes that the policy defines an “occurrence" as an “accident", and that the claim was based on an ultimate claim for injuries resulting from an accident. The policy covered bodily injury caused by an occurrence, and thus the definition was met.
Issue: Was the policy exclusion included within Everett Cash’s policy as to exclusion of coverage if the claim can be covered by workers compensation coverage valid and unambiguous?
Holding: No. The Court noted that the applicable policy exclusion stated that coverage did not apply to “bodily injury of a person if the insured has a workers compensation policy covering the injury or if benefits are payable or are required to be provided by an insured under a workers compensation" or similar law. The Court acknowledged that this exclusion can be argued as both parties to the appeal did, and thus it is ambiguous. As the Taylors could not have even purchased workers compensation insurance to protect themselves from claims from the employees of an independent contractor, the Court stated that it is difficult to see how such an exclusion could have prevented the insurer from protecting the Taylors from the lawsuit. Thus, the trial court’s denial of Everett Cash’s motion for summary judgment was proper.