Insurance Agency Must Pay $5.8 Million for Failure to Obtain Workers Compensation Insurance
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A large insurance agency has been ordered to pay $5.8 Million to a small business because it failed to obtain workers compensation insurance for that business.
The agency, Hilb, Rogal and Hamilton Insurance Services, also failed to tell the company that it was not covered by workers compensation insurance.
An employee of the small company was burned while at work and filed a workers compensation claim. It was after this claim, that the company learned for the first time that it did not have workers compensation insurance. The injured worker brought an action in California which resulted in a verdict against the company of $5.6 Million in favor of the injured employee who suffered second and third degree burns in an explosion.
Although another insurance company paid $1 Million of the claim brought by the insured employee, the remainder of the obligation including interest totaled $5.8 Million.
The insurance agency's defense was that the small company, Rhino, which lines pick up trucks with plastic, told the agency that they did not want workers compensation insurance. The agency claimed that they told Rhino that they should have workers compensation insurance. None of these alleged statements were in writing.
The judge ruled for the business owner, Rhino, and against Hilb, Rogal and Hamilton for their failure to obtain insurance.
In North Carolina, employers who employee more than three employees on a regular basis are required to have workers compensation insurance. Not only are civil penalties imposed for failure to obtain this insurance, but it is also a violation of the criminal statutes and therefore a crime for not obtaining worker compensation insurance.
For more information on this subject, please refer to the section on Workers Compensation.