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The Eighth Circle Firmly Shuts Down the Insurer to Charge Uncommitted Premiums



LM Insurance Corporation sued Dubuque Barge and Fleeting Service Company, d / b / a Newt Marine Service ("Newt Marine"), for breach of contract alleging that Newt Marine wrongly refused to pay premiums due under three separate workers' compensation insurances. . Both parties moved for a brief judgment. The district court granted Newt Marine's proposal and denied LM Insurance's proposal, concluding that the premiums that LM insurance claimed from Newt Marine were not earned by the terms of the police . In LM Insurance Corporation v. Dubuque Barge and Fleeting Service Company, which did business as Newt Marine Service, Nos. 19-1647, U.S. Eighth Circuit Court of Appeals (July 20, 2020) was called upon to resolve dispute.

BACKGROUND

Newt Marine is an Iowa marine construction company that conducts most of its work on a floating mud barge and facility on the Mississippi River. Through Iowa's assigned risk plan, LM Insurance Newt Marine issued three consecutive one ̵

1; year employee compensation insurances from May 2013. Each insurance included the same premium terms. Newt Marine pays an estimated premium. Then, after an audit, LM Insurance calculates the final premium. If the final premium exceeds the original estimated premium, Newt Marine must pay the difference.

Each policy also included the same coverage exclusion. The coverage did not cover bodily harm to "a master or crew member of any ship", otherwise known as "sailors" under the Jones Act, 46 U.S.C. § 30104. This exclusion exists because "seafarers" have a private right to action against their employers for personal injury and according to the Iowa Supreme Court, private action deprives Iowa workers' compensation commission for subject jurisdiction to grant benefits to seafarers employees. [ Harvey & # 39; s Casino v . Isenhour 724 NW2d 705, 709 (Iowa 2006).]

Although the workers' compensation policy issued by LM Insurance excluded Newt Marine's seafarers from coverage, LM Insurance Newt Marine charged a premium for their coverage by including all seafarers employed in their final premium calculations. Because they are excluded from the terms of the policy, seafarers do not engage in "work covered by [the] policy" and Newt Marine refused to pay the additional premium based on seafarers' income.

ANALYSIS

LM Insurance sued Newt Marine, claiming that it was in breach of the agreement for refusing to pay premiums alleged. Because the construction of an insurance contract and the interpretation of its language are legal issues for the court.

Under Iowa law, the parties' intent, determined by the language of insurance, governs the court's interpretation of an insurance policy. The premiums that LM Insurance seeks in this lawsuit are based entirely on compensation paid or payable to Newt Marin's seafarers employed under the three consecutive terms of insurance.

Remuneration for these employees is not covered by the policy. When reading together, it is clear that the language includes compensation for employees who worked with covered work or compensation for non-employees as independent contractors, employees work .

The Eighth Circuit concluded that compensation for Newt Marine's seafarers' employees is not covered by the policy because Newt Marine's seafarers, even if they are employees, do not participate in covered work. Despite LM Försäkringar's opposites, even though Newt Marine's employed seafarers are of course employed, they are not employed in the workers' compensation policy. The premiums charged were not earned by the language of the insurances.

The possibility that Newt Marine during the insurance period can reclassify a seafarer as an employee who works with covered work does not suddenly mean the policy and makes all seafarers covered employees. In the event of reclassification, the reclassified employee's remuneration would cover the part of the policy that works with employees and LM Försäkring's audit at the end of each insurance period could appropriately report such reclassifications.

Because the premiums LM Insurance charged to Newt Marine were not eligible, Newt Marine did not breach its obligations under workers' compensation insurance by refusing to pay.

As the workers' compensation insurance is based on the compensation to covered employees LM Insurance overloaded Newt Marine provided that since the seafarers could be reclassified as employees they were all reclassified. They were not and the premium charged at the audit was inappropriate and violated the terms of the policy issued by LM.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice of serving as an insurance consultant specializing in insurance coverage, handling insurance claims, bad faith insurance and near-insurance insurance fraud. 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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