In this published decision, the issues included whether it was professional negligence for an insurance agent not to include workers' comp coverage in a business package and/or if a business owner was partly liable for not noticing the omission.
The case involved an Oklahoma businessman who, with a partner, started an auto accessory franchise (Rhino Linings) in California.
The business sought insurance from an insurance broker but the insurance package that was ultimately provided didn't include workers compensation insurance.
The lack of workers comp coverage was discovered after an employee was injured in a catastrophic fire during the
third year of business operations.
After a lawsuit in which the employee obtained a
multimillion dollar judgment against the owners of the business, this suit was filed by the
owners against the insurance agency.
The court, following a bench trial, found the
insurance agency liable, and entered judgment in favor of the owners in the amount of the
judgment that remained outstanding in the underlying case.
The insurance agency
appealed, claiming (1) the evidence was insufficient to support negligence on
its part largely because no duty was owed to the insured, (2) the
action was barred by the statute of limitations, and (3) the trial court erred in refusing to
find comparative negligence on the part of the owners, who failed to read the policy.
The appellate court found no errors by the trial court and affirmed the judgment against the insurance brokerage firm for professional negligence.
The Court also ruled that the fact that the business owners didn't notice that workers' compensation coverage was not in their insurance package did NOT amount to comparative negligence under the facts of the case.
The case is Williams v. Hilb, Rogal & Hobbs Ins.
To read the full opinion,
→
CLICK HERE.
