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Beware of Workcover recoveries
May 2009
There is a growing trend by Government Workcover agencies of increasing claims being made by Hosts (Employers) under their conventional broad form public and products liability policy as a result of actions by Third Party Workers (or more and more commonly subrogated actions) by Workcover agencies.
The use of Third Party Workers by businesses around Australia is a well developed and mature phenomenon, and in fact there is an increasing reliance and expenditure on Third Party Workers; who are provided by a diverse and sophisticated array of labour hire companies and contracting organisations.
In the event that any direct employee of a labour hire company or contractor is injured whilst carrying out work duties, they are entitled to the benefits of the relevant workers compensation legislation that exists in each state or territory in which they are employed.
“Injured” Third Party Workers can seek to claim damages or costs from the Host Employer as a result of a perceived negligence by the host that resulted in them suffering an injury. In addition, workers compensation insurers and Government Workcover agencies are also exercising their rights of subrogation to recover the costs of workers compensation from Host Employers.
These claims are a result of a legal liability that emanates from a workplace incident and in turn, employers are relying on their public and products liability policy to respond to such claims. As a direct result, liability insurers are reacting, with some excluding the cover for this exposure, or applying high deductibles up to $50,000 and $100,000, or certain conditions depending on the occupation, or (and sometimes in addition), loading the premium in an attempt to recover the cost of these claims.
It is therefore critical, that employers are aware of this situation and as such, they need to be careful when choosing which insurance provider to use.