Workers Compensation And Insurance

Law Talk

Williams and Simon opened a business called Rhino USA of Santa Fe Springs. Simon was the on-site person and Williams was in charge of finances and insurance etc. Rhino referred Williams to Robyn Thaw, who was then employed by the Robert F. Driver Company, an insurance agency.

Williams was lead to believe that Thaw knew Rhino Linings operations very well, that she understood it very well and had special plans for the Rhino USA companies. She was the "go to person" to take care of insurance needs for Rhino Lining dealerships.

Williams called Thaw in January of 1999 and asked to meet with her to review its insurance needs. Thaw stated that a meeting would not be necessary because she was very familiar with the Rhino Lining programs and was the expert on the product necessary to satisfy Rhino insurance needs. Williams did not even know enough about what kind of insurance was needed to make a specific request, and therefore, he did not request any specific type of insurance. Therefore, Williams asked Thaw for whatever insurance was needed to operate the business.

Thaw faxed a blank application form to Williams. Thaw indicated that the program was designed for Rhino Linings dealers. Williams filled in only basic information and he signed the application and returned it to Thaw, who selected the insurance coverages since Williams left that blank. Thaw did not send the application (which had a section for workers' compensation insurance) back to Williams after she completed it. She submitted the application to Travelers Insurance herself. Sometime after all of this, Thaw switched the insurance agency she worked for but took all of the Rhino Insurance business with her to the new agency.

Unfortunately, there was no provision for workers' compensation insurance in the package, with either of the policies. Furthermore, Thaw knew that workers' compensation insurance is mandatory in California. The lack of workers' compensation was discovered only after an employee was injured in a catastrophic fire during the third year of business operations. The employee obtained a multi-million dollar judgment against the owners (Williams & Simon) of the business and the business. The owners then sued the insurance agency.

The court found that the insurance agency was negligent, by not getting more information from its clients who were the people who were making all the decisions.

The Court of Appeal held that the evidence was clear that a finding of negligence on the part of the agency was sufficient to hold them liable.