Insurance And Domestic Employees

Employers in Grand Prairie, Weatherford, Arlington, Fort Worth, Dallas, Mansfield, Irving, Garland Mesquite, Richardson, and other places across Texas will have insurance coverage on their vehicles, equipment, and employees. At some point there is likely to be times where there is a dispute about the coverage the insurance provides. Here is a case to think about when the term “domestic employee” is used in the policy of insurance that the company has purchased.
The case is styled, Paul Robertson v. Home State County Mutual Insurance Company. The opinion was issued by the Texas Court of Appeals for the Second District in Fort Worth. Here is some background information.
Paul Robertson had obtained a judgment against his employer, Ray Redi-Mix, Inc., for damages for personal injuries that he sustained while on the job. Home State County Mutual Insurance Company (Home State) was an insurer of Redi-Mix. Home State denied coverage under several exclusions contained in the policy of insurance. Home State obtained a summary judgment based on these exclusions.
Factually, here is what happened. Robertson was an employee of Redi-Mix. On November 3, 2005, Robertson informed Redi-Mix that the truck assigned to him had a defective tarp but Redi-Mix instructed him to make do with the tarp. The next day, the tarp malfunctioned and Robertson was seriously injured.
Redi-Mix did not provide workers’ compensation insurance. It did have the Home State policy covering the trucks. The policy provided coverage for “all sums an insured legally must pay as damages because of bodily injury or property damage to which the insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto.” The policy contained the following relevant exclusions to which coverage did not apply:
3. WORKERS COMPENSATION Any obligation for which the insured or the insured’s insurer may be liable under any workers compensation, disability benefits or unemployment compensation law or any similar law.
4. EMPLOYEE INDEMNIFICATION AND EMPLOYER’S LIABILITY Bodily injury to:
a. An employee of the insured arising out of and in the course of employment by the insured; and b. The spouse, child, parent, brother or sister of that employee as a consequence of paragraph a. above.
This exclusion applies:
(1) Whether the insured may be liable as an employer or in any other capacity; and (2) To any obligation to share damages with or repay someone else who must pay damages because of the injury.
But this exclusion does not apply to bodily injury to domestic employees not entitled to workers compensation benefits or to liability assumed by the insured under an insured contract.
Robertson obtained a final judgment against Redi-Mix for, among other things, damages in the amount of $967,631.52.
Home State prevailed in its summary judgment motion on two relevant grounds (1) that coverage under the policy for Robertson’s claims is excluded under the workers’ compensation exclusion and (2) that coverage under the policy for Robertson’s claims against Redi-Mix is excluded under the employee exclusion and did not fall within the “domestic employees” exception.
Robertson contended that the “domestic employees” exception to the employee exclusion applied to extend coverage to him under the policy because he was “employed in the United States” and because he was not entitled to workers’ compensation benefits as an employee of Redi-Mix, a nonsubscriber. He thus advocated interpreting “domestic employees” to mean persons who work in the United States as opposed to persons who perform certain duties at a personal residence. Alternatively, he argued that the term “domestic employees” is, at the very least, ambiguous and, therefore, that his interpretation must be adopted.
In this case, the court pointed out that there is no dispute that Robertson was an employee of Redi-Mix. Thus the court focused on the applicability of the “domestic employees” exception to the employee exclusion.
In discussion the court recognized that the term “domestic” has several accepted meanings. It is defined as both “relating to the household or the family” and “relating and limited to one’s own country.” In light of these two definitions, Robertson argued that a “domestic employee” as used in the policy’s employee exclusion – is a person who works in the United States or, alternatively, that the term is ambiguous because there is more than one accepted meaning. But the court pointed out that “no one phrase, sentence, or section of the policy should be isolated from its setting and considered apart from the other provisions.” And that Robertson is doing exactly that by isolating “domestic employees” from the “not entitled to workers compensation benefits” part of the exception.
This appeals court got into an in depth discussion regarding the definition of “domestic employees” by looking at that term as defined and used in the Texas Workers Compensation Act and the Texas Motor Vehicle Safety Responsibility Act. This would be Texas Labor Code, Section 406.002(a) and 406.091(a)(1) and the Texas Transportation Code, Section 601.051(1) and 601.075(2).
The value in reading this case is in understanding how the courts in Texas look at insurance policies and their interpretation. Of course the best course of action is to get an experienced Insurance Law Attorney involved when having problems.