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No damage, no fault, agent who failed to acquire insurance caused no damage



An action to recover damages for personal injury and a third party action to recover damages for breach of contract resulted in an appeal. The trial decision granted those branches of the third party defendant's cross – movement, which were for a brief judgment rejecting these third party causes. I D evair Da Silva v Champ Construction Corp., A. Logan Insurance Brokerage, et al l., 2020 NY Slip Op 04379, 2017-10174, Supreme Court of the State of New York Appellate Division, Second Judicial Department (5 August 2020) The Appellate Division was called upon to impose liability on an insurance agent who did not purchase workers' compensation insurance.

FACTS

The appellant initiated this action to recover damages for personal injuries which he allegedly suffered in a building accident which occurred on 14 August 2013. The amended complaint alleged violations of labor law §§ 200, 240 and 241 (6) . At the time of the accident, the complainant was employed by the defendant Champ Construction Corp. (hereinafter Champ Construction).

Champ Construction initiated a third party action against an insurance broker, A. Logan Insurance Brokerage ('Logan'). Champ Construction claimed that Logan had agreed to procure workers' compensation coverage for the construction project, but still failed to do so.

Champ Construction moved for a brief assessment of the third party's reasons for the action to recover damages for breach of contract to obtain insurance, negligent failures to obtain insurance and fraud in connection with failure to obtain insurance

The accused by third parties for a brief judgment rejecting the reasons for these third parties' action. The Court of First Instance rejected Champ Construction's proposal to recover damages for breach of contract to obtain insurance, negligent failure to obtain insurance and fraud in connection with failure to obtain insurance and granted the branches of the third party's defendant's cross-examination cause of action of these third parties. Champ Construction Appeals.

ANALYSIS

An insurance broker may be held liable according to theories of breach of contract or negligence for failing to insure insurance in the event that the agent or broker failed to perform the tasks required to obtain insurance, either by proof that it violates the agreement or because it failed to take care of the transaction.

Here, Champ Construction did not show, prima facie, the existence of an agreement by the third party defendants to procure workers' compensation insurance for this project, nor that the third party defendants specifically undertake an obligation to procure such insurance. In addition, the third party's respondents showed that any failures to obtain insurance did not result in damage to Champ Construction. The third party's defendant stated that, notwithstanding the lack of workers 'compensation insurance, the appellant received benefits from the general workers' compensation funds relating to it. Champ Construction produced no evidence to the contrary.

Champ Construction claims that as a result of the failure of the third party defendant to procure insurance, its general liability insurance denied coverage of any contractual damages claimed by the main contractor for this project. However, the register shows that its insurance company with liability insurance refused coverage for that claim based on an exclusion of insurance for damages that arose within the framework of an applicant's employment. As the trial established in an accompanying judgment, the compensation agreement was not validly invoked.

In these circumstances, the minutes, as a matter of law, showed that any failure to obtain insurance did not cause immediate damages to Champ Construction. Accordingly, the Court's decision to grant third-party defendants' cross-examination summary judgment dismissing third parties for breach of contract and negligence causes of action, and to deny the branches of the Champ Construction business that were for a brief assessment of liability for these actions

In addition, the court's decision to grant the branch of the third party's corresponding cross-judgment proposal for a summary judgment rejecting fraud by a third party and to deny the branch of Champ Construction's proposal which was for a summary judgment on liability for that action . Champ Construction failed to show, prima facie that the third party defendants made a material misstatement of the fact of the procurement of insurance.

In addition, the certificate of insurance alleged to have been issued by the third party defendants provided that it "was issued only as an information and [red] no rights to the certificate holder." (emphasis added)

It was therefore unreasonable to rely on that certificate for coverage in the language of the disclaimer.

Insurance certificates at best describe available insurance at the time of issue and do not promise more. Since a certificate is only issued as information questions, it does not give any rights to the person who receives the certificate. No one can reasonably trust an insurance certificate. Since the injured party received the workers' compensation benefits to which he was entitled, the working compensation policy did no harm to the complaining contractor. No harm, no harm, no chance of regaining anything.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant specializing in insurance coverage, insurance claims handling, bad faith insurance and insurance fraud almost equally for policyholders and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and attorney handling attorney and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

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