Earlier this year the Oregon Supreme Court expanded the potential liability of contractors and others for injury to employees of others on a job site, making it more critical than ever for contractors to ensure that they have additional insured protection. In Yeatts v. Polygon Northwest, an employee of a framing subcontractor on a building project was injured when a railing gave way. The general contractor on the project was Polygon. The injured worker sued Polygon under Oregon’s Employer Liability Law (ELL) (ORS 654.305) alleging that Polygon was a “indirect employer” under the law because Polygon was involved in ensuring job-site safety, and was therefore liable for the injuries.

Polygon asserted that it was not an “indirect employer” because it had delegated responsibility for job-site safety to its subcontractors. The Court, however, held that the language of the contract between Polygon and the subcontractor did not clearly put sole responsibility for safety on the subcontractor, and because there was evidence that the general contractor had in fact played a role in monitoring and advising on job-site safety, the general was potentially responsible as an “indirect employer.” You can read more about the decision, and what contractors can do to avoid this result, in this post in our From the Ground Up development blog.

The insurance implications of the decision are subtle, but important. According to Shon DeVries of Propel Insurance in Portland, Oregon, the decision makes it even more important that general contractors pay close attention to getting coverage as an additional insured for bodily injury claims under the insurance purchased by subcontractors. General contractors can do this by having strong additional insured language in their contracts, and by making sure that the subcontractors’ insurance contains the broad additional insured endorsements that are required. “The best way to manage risk as a general contractor is to pass risks down onto those who are best able to avoid injury claims on the job site: subcontractors. But to do that you have to make sure that you’ll be able to enforce your right to additional insured coverage under the subcontractors’ policies. Tight contract requirements and careful review of additional insured endorsements, not just relying on Certificates of Insurance, from each and every subcontractor on the job are critical components to retaining those rights.”

The financial risks from bodily injury claims are significant. General contractors who want to manage those risks should take this new decision into account when negotiating contract language with subcontractors and putting together an insurance program for new projects.